Exam (elaborations)
PFIN 6th Edition by Billingsley - Test Bank
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,1. The average propensity to consume is commonly viewed as a key determinant of standard of living.
a. True
*b. False
2. Financial planning can improve your standard of living.
*a. True
b. False
5. The most effective way to achieve financial objectives is through pe
rsonal financial planning.
*a. True
b. False
6. Two persons with significantly different income can have equal avera
ge propensities to consume because of differences in their standards of
living.
*a. True
b. False
7. Mike’s annual income is $35,000, and he spends $30,800 for current n
eeds. Mike’s average propensity to consume is 80%.
a. True
*b. False
8. Tangible assets are earning assets that are held for the returns the
y promise.
a. True
*b. False
9. It is very easy to change your partner’s financial style, so there i
s no need for financial planning to resolve conflicts regarding money m
atters.
a. True
*b. False
10. The need for financial planning declines as your income increases.
, a. True
*b. False
11. A good financial plan is completed when one is in his or her 30s an
d will typically last a lifetime.
a. True
*b. False
12. Saving $3,000 for a large, flat-screen TV within the next 6 years i
s an example of a short-term goal.
a. True
*b. False
13. Short-term planning should include creating and maintaining an emer
gency fund with six to nine months’ worth of income.
*a. True
b. False
14. It is not good to discuss your financial goals and attitudes toward
money with your partner.
a. True
*b. False
15. For employees of large firms, managing employee benefits is an impo
rtant part of financial planning.
*a. True
b. False
16. Accumulating wealth for later years is called estate planning.
a. True
*b. 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
, 18. Tax plans are closely tied to investment plans.
*a. True
b. False
19. Most people tend to be more liberal about their expenditures during
a recession or crisis.
a. True
*b. False
20. You should always spend more than what you earn.
a. True
*b. False
23. Estate planning does not include taking advantage of and managing e
mployer-sponsored benefits.
a. True
*b. False
24. Recessions and financial crises will always result in job loss.
a. True
*b. False
26. Your purchase, saving, investment, and retirement plans and decisio
ns are influenced only by the present state of the economy.
a. True
*b. False
27. The federal government delegates its regulating economic activity f
unction to businesses and consumers.
a. True
*b. False
28. Living costs are constant throughout the country.
a. True
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