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Personal Finance Ch. 1 Test Review

Total questions: 24

Worksheet time: 24mins

Name
Class
Date
1.

Long term goals take over ______ to complete.

a)

5 years

b)

3 years

c)

2 years

d)

4 and a half years

2.

Short term goals take less than ______ to complete.

a)

5 years

b)

3 years

c)

2 years

d)

1 year

3.

Poor Credit = _____ Interest Rates

a)

Lower

b)

Higher

c)

Doesn't matter

d)

Stays the same

4.

The _______ is responsible for regulating financial activities.

a)

White House

b)

Government

c)

The Federal Reserve

d)

The SEC

5.

There are ___ steps in the financial planning process.

a)

4

b)

5

c)

6

d)

7

6.

What is an example of a short-term financial goal?

a)

Building an emergency savings fund

b)

Investing in a retirement plan

c)

Paying off a long-term loan

d)

Saving for a child's college education

7.

Inflation can be caused by an increase in ________, but not an increase in ________.

a)

Exports, Imports

b)

Trade Deficits, Tariffs

c)

Supply, Demand

d)

Demand, Supply

8.

What is it called when imported goods exceed in value more than exports?

a)

Trade Deficit

b)

Trade Surplus

c)

Import

d)

Export

9.

What are the 3 main financial decisions people can make?

a)

Opportunity Cost, Time Value of Money, Assets

b)

Bankruptcy, Liquidity, Debt

c)

Health Insurance, Life Insurance, Retirement

d)

Spending, Saving, Sharing

10.

What is one personal factor that influences spending/saving?

a)

Age

b)

Inflation

c)

Income

d)

Interest Rates

11.

Which of the following is considered a Consumable-Product Goal?

a)

Online course

b)

Monthly magazine subscription

c)

A loaf of bread

d)

Bicycle

12.

What is an example of an intangible-purchase goal?

a)

Car

b)

Pizza

c)

Microwave

d)

Education

13.

How many times should you review your financial planning process?

a)

After 5 years

b)

12 Weeks

c)

At least once a year

d)

Every 6 months

14.

What is an example of a Durable-Product?

a)

Laundry washer

b)

Food

c)

Education

d)

Pencils

15.

What is the formula for calculating simple interest?

a)
Interest = Principal + Rate + Time
b)
Interest = Principal ÷ Rate × Time
c)
Interest = Rate × Time
d)
Interest = Principal × Rate × Time
16.

What is lifestyle inflation?

a)
Lifestyle inflation is the decrease in spending as income increases.
b)
Lifestyle inflation refers to saving more money when income rises.
c)
Lifestyle inflation is the practice of investing all additional income.
d)
Lifestyle inflation is the increase in spending that occurs as income increases.
17.

Is eating out at fast food restaurant a need or a want? Why?

a)

A want because you can eat at home with groceries.

b)
A health requirement
c)

A need you need to eat to survive

d)

A need because I need my McDonald's or I will die.

18.

Select the best example of a personal finance SMART Goal

a)
I will save $5,000 for a vacation by setting aside $500 each month for 10 months.
b)
I plan to spend less on groceries this month.
c)
I hope to save money for a house someday.
d)
I will buy a new car next year.
19.

The parts of a SMART Goal.

a)
Specific, Measurable, Achievable, Relevant, Time-bound
b)

Specific, Measurable, Accurate, Realistic, Timed

c)

Same, Measurable, Achievable, Flexible, Time-sensitive

d)

Specific, Manageable, Action, Relevant, Timely

20.

Bankruptcy is...

a)
a way to consolidate loans into one payment.
b)
a method for increasing credit scores.
c)

a legal process for individuals or businesses unable to repay debts owed.

d)
a financial strategy for maximizing profits.
21.

Inflation is...

a)
the total amount of money in circulation
b)
the decrease in purchasing power
c)
the measure of economic growth over time
d)
the rate of increase in prices over time
22.

Opportunity cost is...

a)

the value of the next best alternative that you give up when making a decision

b)
the benefits gained from a decision made
c)
the total expenses incurred in a project
d)
the cost of producing an additional unit
23.

Personal financial planning is ...

a)
a way to avoid paying taxes on income.
b)
the act of saving money without a plan.
c)
the process of managing finances to achieve personal financial goals.
d)
a method for investing in stocks only.
24.

Time Value of Money is ...

a)
The Time Value of Money states that future money is always more valuable.
b)
Investing money now guarantees a fixed return in the future.
c)
Money loses value over time due to inflation.
d)

The Time Value of Money is the principle of money available now is worth more in the future due to the potential of inflation and interest.