Ch. 1 Key Term Review

What is the definition of Personal Financial Planning?

• The things you want to accomplish.

• Arranging to spend, save, and invest money to live comfortably, have financial security, and achieve goals.

• The study of the decisions that go into making, distributing, and using goods and services.

______ are the things you want to accomplish. ______ are the beliefs and principles you consider important, correct, and desirable.

• Goals, Values

• Values, Goals

An ________ ____, or trade-off, is what is given up when making one choice instead of another.

What is the ability to easily convert financial assets into cash without loss in value called?

• Opportunity Cost

• Inflation

• Liquidity

A _____ is a task that a person or a machine performs for you. A _____ is a physical item that is produced and can be weighed or measured.

• Good, Service

• Service, Good

_________ is the study of the decisions that go into making, distributing, and using goods and services.

The economy consists of the ways in which people make, distribute, and use their goods and services.

• True

• False

______ is the amount of goods and services available for sale. ______ is the amount of goods and services that people are willing to buy.

• Demand, Supply

• Supply, Demand

The ________ is the central banking organization of the United States.

• Bank of the United States

• Federal Reserve System

• Federal Banking System

What is inflation?

• The rise in the level of prices for goods and services.

• The price that is paid for the use of another’s money.

• The increase of an amount of money due to earned interest or dividends.