Foundations in Personal Finance Ch. 1

Expensive houses and new cars are a true indication of wealth.

• True

• False

Which of the following is not a reason credit is marketed heavily to consumers in the United States?

• The credit industry has become extremely profitable.

• The use of credit is not socially accepted in the United States

• There is strong consumer demand for big ticket items

• Since 1920, credit laws in the United States have been relaxed in an attempt to create a mainstream alternative to loan sharks for the working class.

An obligation of repayment owed by one party to a second party

• Debt

• Ownership

A fee paid by a borrower to the lender for the use of borrowed money.

• Bills

• Interest

The widespread financial insecurity of Americans is primarily because:

• The incomes of Americans are low

• Government programs are unavailable to help people when they are disabled or experience unemployment

• The saving rate of Americans is low and many borrow in order to spend more than they earn

• Most Americans save a high proportion of their income

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 is a consequence of spending more than you make?

• Missed opportunity to save and invest

• Stress

• A cycle of debt

• All options

Most Americans avoid the use of credit when it comes to buying big-ticket items like a car or furniture for their home.

• True

• False

A person or business that offers loans at extremely high interest rates

• Loan Shark

• Creditor

When developing a personal financial plan, one of the first things you should do is assess your current financial situation. This includes your income, assets, and liabilities.

• True

• False