Question 1

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

Accepted Answer

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

Answer

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

Answer

Personal finance skills are better learned through trial and error.

Answer

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

Question 2

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

Accepted Answer

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

Answer

Regularly monitor and reassess your financial plans

Answer

Replace money myths with money truths

Answer

Write out a detailed plan for accomplishing your goals

Question 3

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

Accepted Answer

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.

Answer

We are driven by consumerism.

Answer

Buying things on credit has become acceptable in our culture.

Answer

We are taught that we can buy happiness.

Question 4

Personal finance is primarily the result of:

Accepted Answer

Managing your money behavior

Answer

Inheriting money from your parents

Answer

Generous welfare and unemployment programs

Answer

Winning the lottery

Question 5

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

Accepted Answer

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

Answer

Income alone does determine a person's wealth

Answer

Only people who are natural savers can become wealthy

Answer

Investing is the only factor that contributes to wealth building

Question 6

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

Accepted Answer

All of the above

Answer

Stress

Answer

Missed opportunity to save and invest

Answer

A cycle of debt

Question 7

Which of the following is not a true statement?

Accepted Answer

The credit industry in America has not changed much since 1917.

Answer

Americans learned to borrow amidst post-WWII prosperity.

Answer

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

Answer

After 1970, consumer debt skyrocketed.

Question 8

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

Accepted Answer

20, 80

Answer

60, 40

Answer

50, 50

Question 9

The widespread financial insecurity of Americans is primarily because:

Accepted Answer

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

Answer

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

Answer

The incomes of Americans are low.

Answer

Most Americans save a high proportion of their income.

Question 10

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

Accepted Answer

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

Answer

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

Answer

None of the above.

Answer

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

Question 11

Why was the use of credit uncommon prior to 1917?

Accepted Answer

All of the above

Answer

Lending money to others was not profitable.

Answer

Laws prevented lenders from charging high interest rates.

Answer

Borrowing money was generally not socially acceptable.

Question 12

When it comes to personal finance, the math is easy. What's challenging is managing your

Accepted Answer

Behavior

Answer

Friends

Answer

Bank Account

Answer

Income

Question 13

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

Accepted Answer

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

Answer

There is strong consumer demand for big-ticket items.

Answer

The credit industry has become extremely profitable.

Answer

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.

Question 14

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

Accepted Answer

Consumer credit could be profitable.

Answer

Consumer credit was not a profitable industry.

Answer

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

Answer

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

Question 15

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

Accepted Answer

True

Answer

False

Question 16

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

Accepted Answer

False

Answer

True

Question 17

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

Accepted Answer

False

Answer

True

Question 18

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

Accepted Answer

False

Answer

True

Question 19

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

Accepted Answer

False

Answer

True

Question 20

Having debt keeps you from building wealth.

Accepted Answer

True

Answer

False

Question 21

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

Accepted Answer

True

Answer

False

Question 22

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

Accepted Answer

False

Answer

True

Question 23

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

Accepted Answer

True

Answer

False

Question 24

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

Accepted Answer

False

Answer

True

Question 25

A person or business that offers loans at extremely high interest rates.

Accepted Answer

Loan Shark

Answer

Creditor

Question 26

A person or organization that uses a product or service

Accepted Answer

Consumer

Answer

Borrower

Question 27

An obligation of repayment owed by one party to a second party

Accepted Answer

Debt

Answer

Ownership

Question 28

The granting of a loan and the creation of debt; any form of deferred payment

Accepted Answer

Credit

Answer

Annual Fee

Question 29

The knowledge and skillset necessary to be an informed consumer and manage finances effectively

Accepted Answer

Financial Literacy

Answer

Budgeting

Question 30

A fee paid by a borrower to the lender for the use of borrowed money

Accepted Answer

Interest

Answer

Bills

Question 31

A system by which goods and services are produced and distributed

Accepted Answer

Economy

Answer

Assets

Question 32

A debt evidenced by a "note", which specifies the principal amount, interest rate, and date of repayment

Accepted Answer

Loan

Answer

Fee

Question 33

A period of temporary economic decline during which trade and industrial activity are reduced; generally identified by a fall in gross domestic product (GDP)

Accepted Answer

Recession

Answer

Market Economy

Question 34

All of the decisions and activities of an individual or family regarding their money, including spending, saving, budgeting, etc

Accepted Answer

Personal Finance

Answer

Currency

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