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Exam 1: Understanding the Financial Planning Process

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Question 21

Multiple Choice

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Martha is 80 and has a very high net worth.Her most important financial concern is probably her:

A) career.
B) employee benefits.
C) estate.
D) insurance.
E) savings.

F) A) and B)
G) B) and E)

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Question 22

Multiple Choice

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Tax planning is most commonly done to:

A) reduce debt balances.
B) change income patterns to avoid taxes.
C) minimize taxes.
D) pay extra taxes.
E) learn the tax code.

F) A) and E)
G) A) and C)

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Question 23

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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].

What policies can the government utilize to help stabilize the economy?

Government controls consumers and businesses by regulation and taxation.

The financial crisis of 2008 and 2009 was the first depression the U.S.has experienced in 75 years.

Cities with higher cost of living also experience higher rates of inflation.

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. -For most people,employee benefits are of [little | major] importance.

Money is:

Financial goals should be:

Which of the following goals is stated in a way that is most useful for developing a financial plan?

Two persons with equal average propensities to consume will not necessarily have equal standards of living because of differences in income.

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 Consumer Price Index is a measure of [unemployment | inflation].

Employee benefits can typically be transferred to a new job when one changes employers.

Typically,higher level of education is rewarded with higher income over the lifetime.

Family financial goals should be:

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. -[Putting money into a retirement fund | Buying a car] would be an example of current consumption.

The average propensity to consume refers to the:

The most effective way to achieve financial objectives is through financial planning.

Tangible assets are earning assets that are held for the returns they promise.