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Exam 1: Understanding the Financial Planning Process

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Question 41

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Businesses are a key part of the circular flow of income that sustains our free enterprise system.

A) True
B) False

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Question 42

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Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement. -Money can be withdrawn from tax-deferred retirement accounts without penalty beginning at age [59 1/2 | 62 1/2].

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Question 43

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Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement. -The primary determinant of your standard of living is your [wealth | propensity to consume].

Insurance provides a way to make money on unfortunate events.

Financial goals should be

Businesses provide

A strong economy leads to

Wealthy people have a higher average propensity to consume.

GDP refers to the total earnings of American workers during a year.

Personal financial management is important because it

Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement. -The federal government's [fiscal | monetary] policy is used to stimulate or moderate economic growth.

Over the long run,gaining an extra two percent on an investment makes little difference in earnings generated.

Financial assets are paper assets,such as savings accounts and securities.

Defining financial goals is an important first step in the personal financial planning process.

The amount of money we set aside for future consumption will be determined by

Average propensity to consume refers to how much of your money you plan to save in your financial plan.

The four stages of an economic cycle would not include

Choose the word or phrase in [ ] which will correctly complete the statement. Select A for the first item, B for the second item, and C if neither item will correctly complete the statement. -The average income of household heads increases until age [55 | 65] then income starts decreasing.

Family financial goals should be

Government places controls on the personal financial environment by use of