Chapter 1

1.

4 points

When it comes to personal finance, the math is easy. Whatʹs challenging is managing your
.

Income

Friends

Bank account

Behavior

2.

4 points

Which of the following is not a reason credit is marketed heavily to consumers in the United States?

The credit industry has become extremely profitable

There is strong consumer demand for big-ticket items

Since 1920, credit laws in the United States have been relaxed in an attempt to create a mainstream alternative to loan sharks for the working class

The use of credit is not socially accepted in the United States

3.

4 points

Key components of financial planning include all of the following except:

Write out a detailed plan for accomplishing your goals

Replace money myths with money truths

Allow your financial planner to make all of your major money decisions

Regularly monitor and reassess financial plan

4.

4 points

The widespread financial insecurity of Americans is primarily because:

The incomes of Americans are low

The saving rate of Americans is low and many borrow in order to spend more than they earn

Government programs are unavailable to help people when they are disabled or experience unemployment

Most Americans save a high proportion of their income

5.

4 points

Since you are a teenager, what you do now with money will have little effect on your financial future

True

False

6.

4 points

True financial security is achieved when your money begins to generate an income -your money starts working for you.

True

False

7.

4 points

Everyone should have the same financial plan. A budget that works for one person should be sufficient for everyone.

True

False

8.

4 points

Which of the following is not a factor in becoming money smart?

Have knowledge of basic math

Learn the language of money

Manage your behavior with money

Learn how to read your credit card statements

9.

4 points

Learning the language of money is not that important because you will be able to depend on financial planners to manage your money

True

False

10.

4 points

Why was the use of credit uncommon prior to 1917?

Laws prevented lenders from charging high interest rates

Borrowing money was generally not socially acceptable

Lending money to others was not profitable

All of the above

11.

4 points

Most Americans today are wealthy and will have financial security when they retire.

True

False

12.

4 points

Personal financial success is primarily the result of:

Managing your money behavior

Winning the lottery

Generous welfare and unemployment programs

Inheriting your money from your parents

13.

4 points

The credit system today is structured to accommodate a state of uncertain employment and income instability, utilizing high interest rates and fees to turn huge profits.

True

False

14.

4 points

Which of the following statements best describes how Americans are being outsmarted by banks and other lenders?

Credit is marketed so well that we desire to have it while completely dismissing the fact that interest rates and fees continue to destroy our financial well-being.

We are taught that we can buy happiness.

Buying things on credit has become acceptable in our culture.

We are driven by consumerism

15.

4 points

Which of the following statements best explains why income alone does not determine wealth?

Investing is the only factor that contributes to wealth building

Income alone does determine a person's wealth

Only people who are natural savers can become wealthy

How much money a person makes does not dictate his or her spending and saving behavior.

16.

4 points

Having debt keeps you from building wealth.

True

False

17.

4 points

Expensive houses and new cars are a true indication of wealth.

True

False

18.

4 points

Which of the following is not a benefit of understanding your own money personality?

Recognizing who you are allows you the opportunity to grow and learn

Once you know your money personality, you can develop a financial plan that works for you

Knowing your money personality allows you to excuse excessive spending because it is simply part of your nature

None of the above

19.

4 points

When it comes to managing money, success is about % knowledge and % behavior.

50, 50

60, 40

80, 20

20, 80

20.

4 points

Which of the following is a consequence of spending more than you make?

Missed opportunity to save and invest

Stress

A cycle of debt

All of the above

21.

4 points

Which of the following is not a true statement?

Americans learned to borrow amidst post-WWII prosperity

After 1970, consumer debt skyrocketed

The credit industry in America has not changed much since 1917

As banks made higher profits, they were willing to lend more money to consumers

22.

4 points

Most Americans avoid the use of credit when it comes to buying big -ticket items like a car or furniture for their home.

True

False

23.

4 points

When developing a personal financial plan, one of the first things you should do is assess your current financial situation. This includes your income, assets and liabilities.

True

False

24.

4 points

Which of the following best explains why students should learn about personal finance?

Learning to manage money will help you achieve a profitable career.

Personal finance skills are highly complex and require a great deal of time to learn.

learning to manage money at this stage can eliminate financial mistakes and promote huge financial benefits for the future.

Personal finance skills are better learned through trial and error.

25.

4 points

During the Great Depression, New Deal policymakers came up with mortgage (home loans) and consumer lending policies that convinced commercial banks that:

Consumers would not be willing to use credit, since borrowing money for large purchases had not previously been an option for the middle class

They would not be able to compete with loan sharks in the industry of consumer lending

Consumer credit could be profitable

Consumer credit was not a profitable industry