Unit 3 Test Review

What is the definition of personal financial planning?

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

• Managing only your savings and investments

• Spending money without a plan

• Focusing solely on retirement funds

Which of the following is NOT a step in the financial planning process?

• Determine Your Current Financial Situation

• Develop Your Financial Goals

• Ignore Your Financial Situation

• Review and Revise Your Plan

What are the beliefs and principles you consider important, correct, and desirable called?

• Values

• Goals

• Risks

• Plans

Which of the following is a type of financial risk?

• Inflation risk

• Career risk

• Social risk

• Health risk

What is the difference between short-term goals and long-term goals?

• Short-term goals take one year or less to achieve; long-term goals take more than five years

• Short-term goals are more important than long-term goals

• Long-term goals are easier to achieve than short-term goals

• Short-term goals require more planning than long-term goals

Which of the following is an example of a financial goal?

• Buying a computer

• Going for a walk

• Reading a book

• Watching a movie

How does high consumer spending affect the economy?

• It creates more jobs and maintains them

• It decreases the unemployment rate

• It leads to higher taxes

• It causes inflation to rise

Which of the following is a strategy to achieve your financial goals?

• Plan

• Ignore

• Procrastinate

• Forget

What is a plan of action in personal finance?

• A list of ways to achieve your financial goals

• A method to calculate taxes

• A strategy for spending all your income

• A guide to avoid all financial risks

What is the Federal Reserve System?

• The central banking organization of the United States

• A private investment bank

• A local credit union

• A global financial advisory firm