1. The average propensity to consume is commonly viewed as a key determinant of standard of living.
a. True
b. False
ANSWER: False
2. Financial planning can improve your standard of living.
a. True
b. False
ANSWER: True
3. Standard of living is defined as the necessi...
Chapter 01: Understanding the Financial Planning Process
1. The average propensity to consume is commonly viewed as a key determinant of standard of living.
a. True
b. False
ANSWER: False
2. Financial planning can improve your standard of living.
a. True
b. False
ANSWER: True
3. Standard of living is defined as the necessities, comforts, and luxuries desired by an individual or a family.
a. True
b. False
ANSWER: True
4. Personal financial plans help individuals have the same standard of living across the country.
a. True
b. False
ANSWER: False
5. The most effective way to achieve financial objectives is through personal financial planning.
a. True
b. False
ANSWER: True
6. Two persons with significantly different income can have equal average propensities to consume because of differences
in their standards of living.
a. True
b. False
ANSWER: True
7. Mike’s annual income is $35,000, and he spends $30,800 for current needs. Mike’s average propensity to consume is
80%.
a. True
b. False
ANSWER: False
8. Tangible assets are earning assets that are held for the returns they promise.
a. True
b. False
ANSWER: False
9. It is very easy to change your partner’s financial style, so there is no need for financial planning to resolve conflicts
regarding money matters.
Copyright Cengage Learning. Powered by Cognero. Page 1
,Name Clas Dat
: s: e:
Chapter 01: Understanding the Financial Planning Process
a. True
b. False
ANSWER: False
10. The need for financial planning declines as your income increases.
a. True
b. False
ANSWER: False
11. A good financial plan is completed when one is in his or her 30s and will typically last a lifetime.
a. True
b. False
ANSWER: False
12. Saving $3,000 for a large, flat-screen TV within the next 6 years is an example of a short-term goal.
a. True
b. False
ANSWER: False
13. Short-term planning should include creating and maintaining an emergency fund with six to nine months’ worth of
income.
a. True
b. False
ANSWER: True
14. It is not good to discuss your financial goals and attitudes toward money with your partner.
a. True
b. False
ANSWER: False
15. For employees of large firms, managing employee benefits is an important part of financial planning.
a. True
b. False
ANSWER: True
16. Accumulating wealth for later years is called estate planning.
a. True
b. False
ANSWER: False
17. The longer you wait to begin retirement planning, the less you are likely to have in your retirement fund.
a. True
b. False
ANSWER: True
Copyright Cengage Learning. Powered by Cognero. Page 2
, Name Clas Dat
: s: e:
Chapter 01: Understanding the Financial Planning Process
18. Tax plans are closely tied to investment plans.
a. True
b. False
ANSWER: True
19. Most people tend to be more liberal about their expenditures during a recession or crisis.
a. True
b. False
ANSWER: False
20. You should always spend more than what you earn.
a. True
b. False
ANSWER: False
21. Commission-based financial planners charge fees for the financial products they sell.
a. True
b. False
ANSWER: False
22. Fee-only financial planners charge commission for the products they sell.
a. True
b. False
ANSWER: False
23. Estate planning does not include taking advantage of and managing employer-sponsored benefits.
a. True
b. False
ANSWER: False
24. Recessions and financial crises will always result in job loss.
a. True
b. False
ANSWER: False
25. Financial planning takes place in a dynamic economic environment created by the actions of the government,
business, and consumers.
a. True
b. False
ANSWER: True
26. Your purchase, saving, investment, and retirement plans and decisions are influenced only by the present state of the
economy.
Copyright Cengage Learning. Powered by Cognero. Page 3
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller ExamsExpert. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $23.40. You're not tied to anything after your purchase.
