Money Matters-- Chapter 1 Review

Which of the following best explains why students should learn about personal finance?

• Learning to manage money at this stage can eliminate financial mistakes and promote huge financial benefits for the future.
• Personal finance skills are better learned through trial and error.
• Personal finance skills are highly complex and require a great deal of time to learn.
• Learning to manage money will help you achieve a profitable career.

Key components of financial planning include all of the following except:

• Write out a detailed plan for accomplishing your goals
• Replace money myths with money truths
• Allow your financial planner to make all of your major money decisions
• Regularly monitor and reassess your financial plan

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 while completely dismissing the fact that interest rates and fees continue to destroy our financial well-being.
• We are taught that we can buy happiness.
• Buying things on credit has become acceptable in our culture.
• We are driven by consumerism.

Personal financial success is primarily the result of:

• Managing your money behavior
• Winning the lottery
• Generous welfare and unemployment programs
• Inheriting money from your parents

Which of the following statements best explains why income alone does not determine wealth?

• Investing is the only factor that contributes to wealth building.
• Income alone does determine a personʹs wealth.
• Only people who are natural savers can become wealthy.
• How much money a person makes does not dictate his or her spending and saving behavior.

Which of the following is a consequence of spending more than you make?

• Missed opportunity to save and invest
• Stress
• A cycle of debt
• all of the answers are correct

Which of the following is not a true statement?

• Americans learned to borrow amidst post-WWII prosperity.
• The credit industry in America has not changed much since 1917.
• After 1970, consumer debt skyrocketed
• As banks made higher profits, they were willing to lend more money to consumers.

When it comes to managing money, success is about ________% knowledge and ________% behavior.

• 50, 50
• 60, 40
• 80, 20
• 20, 80

The widespread financial insecurity of Americans is primarily because:

• The incomes of Americans are low
• The saving rate of Americans is low and many borrow in order to spend more than they earn.
• Government programs are unavailable to help people when they are disabled or experience unemployment
• Most Americans save a high proportion of their income

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 with money
• Learn how to read your credit card statements