Financial Literacy Chapter 1 Test

Inflation reduces the buying power of the dollar.

• True

• False

Opportunity costs refer to what a person gives up when making a choice.

• True

• False

Personal opportunity costs refer to time, effort, and health that are given up when a decision is made.

• True

• False

Sound financial goals should be broad with no time limit in order for you to achieve them.

• True

• False

Opportunity costs may be viewed only in terms of financial resources.

• True

• False

Increased consumer spending will usually cause:

• lower consumer prices.

• reduced employment levels.

• lower wages.

• lower interest rates.

• higher employment levels.

The stages in the family and financial needs of an adult are called the:

• financial planning process.

• budgeting procedure.

• personal economic cycle.

• adult life cycle.

• tax planning process.

The study of how wealth is created and distributed is:

• financial planning.

• opportunity cost.

• inflation.

• economics.

• a market economy.

As Olivia Wilson plans to set aside funds for her young children's college education, she is setting a(n) goal.

• intermediate

• long-term

• short-term

• intangible

• durable

goals that relate to large, infrequent purchases, such as a new oven

• Durable-product

• Short-term

• Consumable-product

• Intangible-purchase

• Intermediate