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Chapter 1 Personal Finance Flashcards | StudBud
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Chapter 1 Personal Finance
Chapter 1 Personal Finance
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Flashcards
28 cards
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Questions
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Answers
1
Expensive houses and new cars are a true indication of wealth.
False
True
2
Having debt keeps you from building wealth.
True
False
3
When it comes to personal finance, the math is easy. What's challenging is managing your money____________.
Bank Account
Behavior
Income
Friends
4
All of the decisions and activities of an individual or family regarding their money
currency
personal finance
5
An obligation of repayment owed by one party to a second party
ownership
debt
6
Which of the following is NOT a true statement?
The credit industry in America has not changed much since 1917
Americans learned to borrow admist post-WWII prosperity
After 1970, consumer debt skyrocketed
As banks made higher profits, they would lend more money to consumers
7
The knowledge and skill set necessary to be an informed consumer and manage finances effectively
budgeting
financial literacy
8
A system by which goods and services are produced and distributed
economy
assests
9
Key components of financial planning include all of the following except:
allow your financial planner to make all of your major money decisions
write out a detailed plan for accomplishing your goal
regularly monitor and reassess your financial plan
replace money myths with money truths
10
A period of temporary economic decline during which trade and industrial activity are reduced
market economy
recession
11
The granting of a loan and the creation of debt; any form of deferred payment
annual fee
credit
12
Which of the following is a consequence of spending more than you make?
all of the above
Stress
a cycle of debt
missed opportunity to save and invest
13
A person or business that offers loans at extremely high interest rates
creditor
architect
Loan shark
consumer
14
A fee paid by a borrower to the lender for the use of borrowed money
interest
bills
15
Which of the following best explains why students should learn about personal finance?
personal finance skills are better learned through trial and error
personal finance skills are highly complex and require a great deal of time
learn to manage money can eliminate financial mistakes & promote behavior
to help them become greedy
16
When it comes to managing money, success is about ______% knowledge and ______% behavior
80, 20
50, 50
60, 40
20, 80
17
The widespread financial insecurity of Americans is primarily because:
Government programs are unavailable to people when disabled or unemployed
Most Americans save a high proportion of their income
The incomes of Americans are low
The saving rate is low; they borrow in order to spend more than they earn.
18
Everyone should have the same financial plan.
True
False
19
A person or organization that uses a product or service
Consumer
Borrower
20
Which of the following statements best describes how Americans are being outsmarted by banks and other lenders?
Credit is marketed so well that we desire to have it, dismissing interest
we are taught that we can buy happiness
buying things on credit has become acceptable in our culture
we are driven by consumerism
21
Since you are a teenager, what you do now with money will have little effect on your financial future.
False
True
22
Learning the language of money is not that important because you can depend on financial planners to manage your money
False
True
23
A debt evidenced by a "note", which specifies the principal amount, interest rate, and date of repayment
loan
check
bank fee
savings account
24
Personal finance success is primarily the result of:
inheriting money from your parents
managing your money behavior
generous welfare and unemployment programs
winning the lottery
25
Most Americans today are wealthy and will have financial security when they retire.
False
True
26
Which of the following statements best explains why income alone does not determine wealth?
Income alone does determine a person's wealth
How much money a person make doesn't dictate their spending/saving behavior
Investing is the only factor that contributes to wealth building
Only people who are natural savers can become wealthy
27
Which of the following is NOT a factor in becoming money smart?
Have knowledge of basic math
Learn the language of money
Manage your behavior
Learn how to read your credit card statements
28
Why was the use of credit uncommon prior to 1917?
Lending money to others was not profitable
All of the above
Laws prevented lenders from charging high interests rates
Borrowing money was generally not socially acceptable
