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Exam 1: Personal Finance Basics and the Time Value of Money

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Question 31

Multiple Choice

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The future value of $1,000 deposited a year for 5 years earning 4 percent would be approximately:

A) $5,000
B) $5,250
C) $5,400
D) $6,500
E) $8,200

F) B) and D)
G) B) and C)

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Question 32

Multiple Choice

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Which of the following would cause prices to drop?

A) Increased taxes on business
B) Higher levels of demand by consumers
C) A demand for higher wages
D) A reduction in the money supply
E) Increased production by business

F) C) and D)
G) C) and E)

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Question 33

Multiple Choice

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A formalized report that summarizes your current financial situation, analyzes your financial needs, and recommends a direction for your financial activities is a(n) :

Attempts to increase income are part of the ____________ component of financial planning.

The main economic influence that determines prices is:

The annual price increase for consumer goods and services measured by the Bureau of Labor Statistics is called ________.

Time value of money refers to changes in consumer spending when inflation occurs.

Developing and using a budget is part of which component of financial planning?

Melanie Walsh likes to go to the movies once a week. When she is at the movies, she generally gets large popcorn and a drink. Melanie 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 Melanie?

Trade balance is defined as the difference between a country's exports and its imports.

More recently, the annual price increase for most goods and services as measured by the consumer price index has been less than ____ percent.

The ability to convert financial resources into usable cash with ease is referred to as:

A major activity in the planning component of financial planning is:

Lynn Roy knows that if she continues to work full time, it will be difficult for her to get the time off she needs to be able to travel around the world. However, if she continues to work full time she will more easily earn the money she needs to take her trip and still have money left for her living expenses after she gets back from her trip. Which step in the financial planning process does this scenario demonstrate?

The study of how wealth is created and distributed is:

Higher prices are likely to result from:

Some savings and investment choices have the potential for higher earnings. However, these may also be difficult to convert to cash when you need the funds. This problem refers to:

If a person deposited $50 a month for 6 years earning 8 percent, this would involve what type of computation?

One aspect of financial planning is to buy stocks, bonds and mutual funds with the potential for long term growth. Which aspect of financial planning does this deal with?

Describe the S-M-A-R-T approach to financial planning goal setting. Give an example.