When a financial advisor says that everyone should follow the principle of "Pay yourself first," the advisor means that a person should

• pay credit card bills before going on vacation

• borrow money to buy personal time

• put aside money for saving and investing from each paycheck before spending

• help family members reduce their credit card debt before saving for retirement.

When retail prices increase faster than wages, the purchasing power of the dollar tends to

• remain unchanged.

• increase.

• decrease.

• fluctuate unpredictably.

When prices rise 3% from the previous year and a person's income stays the same, that income

• has more purchasing power than it did in the previous year..

• has to increase by 6% to equal the increase in prices.

• will not be affected by the increase in prices.

• will have less purchasing power than it did in the previous year.

A person’s net worth is $10,000. He has $25,000 in assets. How much does he have in liabilities?

• $5,000

• $10,000

• $15,000

• $35,000

A person has a net worth of $5,000 and has assets totaling $7,000. How much does this person have in liabilities?

• $2,000

• $5,000

• $7,000

• $12,000

During a period of inflation, people can definitely expect

• a decrease in the cost of housing.

• their money to buy fewer goods and services.

• investments to grow in value.

• to lose their jobs.

Which is an example of "pay yourself first"?

• Budgeting the same amount of money each month for entertainment.

• Setting aside money from each paycheck to pay a car loan.

• Paying the monthly telephone bill electronically from a checking account.

• Saving some money from each paycheck before spending any of it.

Read this paragraph, "In a market economy such as the United States, goods are exchanged for money. Money is, therefore, a medium of exchange. The use of money allows people to compare the value of what they are getting to what they are paying for the item or service be purchased." Based on the paragraph above, a person is being told that generally

• the more you pay for something, the more value is has.

• the less you pay for something, the more value is has.

• the more you pay for something, the less value it has.

• there is no way to determine the value of something.

Which of the following should be listed as a variable expense on a monthly budget?

• Insurance premiums.

• Student loan payments.

• Clothing.

• Rent.

Today, many people who are retired do NOT have enough money to pay their bills. What is the most likely reason for this?

• Many individuals did not save and plan for retirement.

• The rate of inflation decreased over the past twenty years.

• Banks do not pay interest on savings and checking accounts once individuals reach age 65.

• Social Security Income is only paid for three years after an individual retires.