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WorksheetsExam 1 Review
Total questions: 63
Worksheet time: 32mins
What economic condition is most likely to occur when consumer demand increases without a corresponding increase in supply?
Deflation.
Stagnation.
Lower interest rates.
Inflation.
Increased production.
When consumer prices increase, which of the following is most likely to occur?
Decrease in government spending.
Increase in unemployment rates.
Increase in interest rates.
Decrease in consumer savings.
Increase in foreign investments.
What is a likely effect of increased consumer spending?
lower consumer prices.
reduced employment levels.
lower wages.
lower interest rates.
higher employment levels.
What are the phases in an adult's family and financial journey known as?
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
What is a primary factor that can lead to inflation in an economy?
fluctuations in currency exchange rates.
increases in consumer savings.
rises in production costs without a rise in supply.
decreases in the money supply.
increases in government regulations.
The Fed refers to:
government regulation of business.
congress.
the Federal Reserve System.
the Federal Deposit Insurance Corporation
spending by the federal government.
What is one of the primary functions of the Federal Reserve?
regulate the money supply.
authorize federal expenditures.
establish national tax policies.
identify unlawful corporate practices.
ensure a balanced federal budget.
Luna is considering some savings and investment choices that have the potential for higher earnings. However, she realizes that these may also be difficult to convert to cash when she needs the funds. This problem refers to:
inflation risk
interest rate risk
income risk
personal risk
liquidity risk
As Olivia Wilson plans to set aside funds for her young children's college education, she is setting a(n) goal.
intermediate
short-term
durable
William Davis wants to "set aside $60 each month for a holiday." What is missing from William’s plan?
measurable criteria.
a feasible outlook.
the specific steps to be taken.
a defined timeline.
Which of the following financial goals is most specific and measurable?
"Cut down on unnecessary expenses."
"Save money for a future trip."
"Allocate $50 per month to build a $2,000 savings account."
"Enhance our savings account."
Opportunity cost refers to:
money needed for major consumer purchases.
what a person gives up by making a choice.
the amount paid for taxes when a purchase is made.
current interest rates.
evaluating different alternatives for financial decisions.
Avery is considering using her savings to buy a new laptop. An example of a personal opportunity cost for her would be:
interest lost by using savings to make a purchase.
higher earnings on savings that must be kept on deposit a minimum of six months.
lost wages due to continuing as a full-time student.
time spent comparing several brands of personal computers.
All of the above are examples of personal opportunity costs.
__________ risk refers to the danger of changes in buying power during times of rising or falling prices.
Liquidity
Income
Interest Rate
Inflation
What is an example of a trade-off in decision making?
Choosing to work overtime instead of attending a concert
Paying off a credit card balance
Investing in a retirement fund
Buying groceries for the week
Using a smartphone for communication
The changing cost of money when borrowing is referred to as risk.
inflation
income
personal
Sophia Martinez is assessing her balances. She expects to retire in the next year and has $675,000 in savings and investments and owns her own home that is worth $250,000. Which step in the financial planning process does this situation demonstrate?
Determining her current financial situation
Developing her financial goals
Identifying alternative courses of action
Evaluating her alternatives
Implementing her financial plan
Sophia Martinez wants to travel after she retires as well as pay off the balance of the loan she has on the home she owns. Which step in the financial planning process does this situation demonstrate?
Determining her current financial situation
Developing her financial goals
Identifying alternative courses of action
Evaluating her alternatives
Implementing her financial plan
Sophia Martinez has decided to retire and use the time she has earned to travel around the world. She has decided to start her trip around the world in Europe by train and bus and will use her savings to pay for her trip. Which step in the financial planning process does this scenario demonstrate?
Developing her financial goals
Identifying alternative courses of action
Evaluating her alternatives
Implementing her financial plan
Reviewing and revising her financial plan
Sarah is planning to buy a new laptop for her freelance graphic design work. The laptop she wants is priced at $1,200. However, Sarah is worried about the possibility of losing clients due to market changes. What type of risk is Sarah concerned about? Which type of risk is Sarah concerned about?
Inflation risk
Interest rate risk
Income risk
Personal risk
Liquidity risk
Sarah is planning to buy a new smartphone that currently costs $700. She is concerned that if she delays her purchase, the price might increase to $900. What type of risk is Sarah concerned about?
Inflation risk
Interest rate risk
Income risk
Personal risk
Liquidity risk
James is considering taking out a loan to buy a 65" LED TV for $500. He is concerned that if he locks in a loan now, future interest rates might decrease, leaving him with a higher rate than necessary. What type of risk is Patrick concerned about? What type of risk is Patrick concerned about?
Inflation risk
Interest rate risk
Income risk
Personal risk
Liquidity risk
Nia Rogers is evaluating the potential purchase of 20-year corporate bonds from Duke Energy Company. She anticipates earning an interest rate of 5 percent with these bonds. However, she is worried because she might need to liquidate her investment in two years, and she has heard that the bonds might have to be sold at a much lower price than the purchase price. What type of risk is Nia concerned about? What type of risk is Nia concerned about?
Inflation risk
Interest rate risk
Income risk
Personal risk
Liquidity risk
Paulo Valle has just moved into a new house and needs a lawn mower, since he has always lived in apartments and now he has a lawn to mow. What type of goal would this be for Paulo?
Consumable-product goal
Durable-product goal
Intangible goal
Intermediate goal
Long-term goal
Stella Jones likes to go to the movies once a week. When she is at the movies, she generally gets a large popcorn and a drink. Stella wants to be sure that she sets aside money each week so she can continue going to the movies. What type of goal would this be for Stella? What type of goal would this be for Stella?
Consumable-product goal
Durable-product goal
Intangible goal
Intermediate goal
Long-term goal
Which of the following are considered technical skills rather than general skills?
Project management expertise
Ability to adapt to new situations
Critical thinking and problem-solving
Interpersonal communication
Team collaboration
What distinguishes a career from a job?
It offers a clear path for occupational growth.
It requires no commitment to a specific field.
It involves ongoing education and skill development.
It disregards personal interests.
It guarantees an internship opportunity.
Which one of the following is defined as a commitment to a profession that requires continued training and offers a clear path for occupational growth?
Apprenticeship
Job
Internship
Career
Cooperative employment experience
Natural abilities that people possess are called:
interests.
aptitudes.
attitudes.
personality traits.
occupational techniques.
Which of the following is the process of making and using contacts to obtain and update career information and find job opportunities?
Networking
An internship
A career fair
A cover letter
Financial planning
A type of employee benefits program that allows workers to base their job benefits on a credit system and personal needs is called:
cafeteria-style.
mandatory.
flexible.
voluntary.
bundled.
When considering career decisions, which of the following trade-offs might one encounter?
Choosing a job with flexible hours over one with a higher salary.
Declining a job offer that requires relocation to maintain family stability.
Opting for a lower-paying job that offers more personal satisfaction.
Leaving a corporate position to start a freelance career.
All of these choices are correct.
If a household has $60,000 in assets and $18,000 in liabilities, what would be their net worth?
$60,000
$42,000
$78,000
$48,000
$18,000
John Smith has calculated that the value of his liquid assets is $5,200, the value of his real estate is $150,000, the value of his personal possessions is $45,000, and the value of his investment assets is $90,000. He has also determined the value of his current liabilities is $8,000 and the value of his long-term liabilities is $100,000. What is John's net worth? What is John's net worth?
$182,200
$250,200
$282,200
$182,000
$182,500
Ella McDonald has evaluated her financial assets. Her checking account holds $1,000 and her savings account contains $2,000. She owns a house valued at $120,000. Her furniture and appliances are worth $15,000, and she has a smartphone valued at $1,200. She possesses a car worth $14,000 with an outstanding auto loan of $10,000. Additionally, she has stocks valued at $5,000 and a retirement fund of $40,000. What is the total value of her assets? What is the total value of her assets?
$198,200
$198,000
$196,200
$195,000
$199,200
A family has liabilities amounting to $200,000 and their assets are valued at $375,000. What is their net worth?
$175,000
$200,000
$375,000
$575,000
$775,000
Chloe Jones has evaluated her financial assets. Her checking account holds $1,100 and her savings account contains $1,500. She owns a house valued at $95,000. Her furniture and appliances are worth $13,000, and her electronics, including a home computer and laptop, are valued at $4,000. She possesses a car worth $12,000. Additionally, she has an annuity valued at $6,000 and a retirement account worth $45,000. What is the total value of her liquid assets? What is the total value of her liquid assets?
$1,500
$2,600
$51,000
$95,000
$176,600
Ruth Fraser has calculated that her liquid assets are valued at $5,000, her real estate is worth $130,000, her personal possessions are valued at $60,000, and her investment assets are worth $80,000. She also found that her current liabilities amount to $8,000 and her long-term liabilities are $95,000. What is the total value of her liabilities?
$103,000
$175,000
$95,000
$88,000
$183,000
The Ramos family budgets $500 a month for entertainment. Last month they spent $480, which results in a:
A) balanced budget.
B) budget deficit of $480.
C) budget surplus of $20.
D) budget deficit of $20.
E) budget surplus of $500.
What is the primary purpose of maintaining a home file?
To keep all financial documents and records.
To manage financial records for immediate use.
To store documents that need high security.
To archive outdated financial documents.
To preserve irreplaceable records.
Which of the following documents would most likely be stored in a safe-deposit box?
W-2 forms
Personal financial statements
Warranties
Birth certificates
Checking account statements
What are liquid assets?
Amounts due for payment in the near future.
Cash and assets that can be quickly turned into cash.
The total earnings a household can use for expenses.
The worth of financial investments.
Amounts subject to taxation.
Jeremy Chase is planning his financial strategy for the upcoming year. Which item on his balance sheet would help him identify the obligations he needs to settle within the next twelve months?
Budget variance
Investment assets
Long-term liabilities
Current assets
Current liabilities
A person's net worth would increase as a result of:
reducing the amounts you owe to others.
decreasing savings.
increasing spending for current living expenses.
decreasing the value of personal possessions.
decreasing the value of investments.
If a family planned to spend $400 for food during April but only spent $350, this difference would be referred to as a:
surplus
deficit
fixed living expense
budget reduction
contribution to net worth
Ian Parr wants to keep track of his monthly utility bills, credit card statements, and insurance documents. Where should Ian ideally store these documents?
Home file
Safe deposit box
File at work
Neighbor's house
No storage needed
Chloe Jones has evaluated her financial assets. Her checking account holds $950 and her savings account contains $1,500. She owns a house with a market value of $125,000. Her furniture and appliances are valued at $13,000, and her electronics, including a computer and a laptop, are worth $3,800. She possesses a car valued at $13,500. Additionally, she has invested in a mutual fund worth $6,000 and maintains a retirement account valued at $40,000. What is the total value of her real estate assets? What is the total value of her real estate assets?
$2,450
$125,000
$29,300
$46,300
$181,750
Sarah Thompson keeps track of her monthly expenses by remembering them without writing anything down or using any digital tools. What kind of budgeting method is Sarah using? What kind of budgeting method is Sarah using?
Mental budget
Physical budget
Written budget
Computerized budget
Cloud budget
Freddie Moore has developed a budget that he follows each month. Freddie has an envelope for each type of expenditure. After he cashes he paycheck, he puts the amount of cash in each envelope that he plans to spend on that category each month. What type of budget has Freddie created?
Mental budget
Physical budget
Written budget
Computerized budget
Cloud budget
Lora has decided to manage her finances by allocating specific amounts of cash into different envelopes for her monthly expenses. After receiving her salary, she distributes the cash into these envelopes according to her spending plan. What type of budgeting method is Lora using?
Mental budget
Physical budget
Written budget
Computerized budget
None of these choices are correct.
Which of the following is typically a recurring monthly cost?
Internet subscription
Groceries
Rent
Entertainment
Clothing
Flexible payments that change from month to month are referred to as:
variable expenses.
fixed expenses.
cash flow.
insolvency.
budget variance.
Which of the following can be minimized through budgeting?
Overusing credit
Lacking a regular savings program
Failing to ensure future financial security
All of these choices are correct.
None of these choices are correct.
Which of these is an example of an opportunity cost?
Spending for current living expenses increases the amount you have for saving and investing.
Saving and investing for the future reduces the amount you can spend now.
Buying on credit results in payments later and increases the amount of future income available.
Using savings for purchases results in additional interest earnings.
Comparison shopping costs you money.
One of the main purposes of personal financial statements is to:
report your future financial position relating to the value of items owned and owed.
measure your progress toward financial goals.
maintain information about your professional work activities.
provide data you can use when rating a restaurant.
provide data you can use when applying for a job.
The 50/30/20 financial rule of thumb suggests that 50 percent of income be used for:
necessities
wants
savings
car buying
education
Describe inflation:
Which of the following is an example of a financial opportunity cost?
Choosing to invest in stocks rather than bonds.
Paying off a student loan early to save on interest.
All of the above.
Spending money on a vacation instead of saving for retirement.
What is a potential trade-off when deciding to pursue higher education?
Gaining specialized knowledge but incurring student debt.
All of the above.
Access to better job opportunities but sacrificing current income.
Improving career prospects but delaying entry into the workforce.
What is a potential benefit of creating a detailed personal budget?
Higher taxes.
Better control over spending.
Reduced savings.
Increased financial uncertainty.
Which of the following is an example of a fixed expense?
Entertainment costs.
Groceries.
Rent or mortgage payment.
Utility bills.
