Chapter 1 Study Guide

Question 1

Financial Goals should be:

Answer 1

1. Specific
2. Measurable
3. Attainable
4. Realistic
5. Timely

Question 2

Standard of Living

Answer 2

The necessities, comforts, and luxuries enjoyed or desired by an individual or family

Question 3

The percentage of each dollar of income on average that a person spends for current needs rather than savings

Answer 3

Average Propensity to Consume

Question 4

Intangible assets such as a ________ that are acquired for some promised future return, are known as _____

Answer 4

Savings Account and Securities

Financial Assets

Question 5

Tangible Assets are ________ such as ______, _____ and can be held for either consumption or investment purposes

Answer 5

Physical Assets

House and Car

Question 6

Personal Financial Planning - systematic process that considers important elements of an

Answer 6

individual’s financial affairs in order to fulfill financial goals

Question 7

The amount of satisfaction received from purchasing certain types or quantities of goods and services

Answer 7

Utility

Question 8

Short Term Goals
Intermediate Goals
Long Term Goals

Answer 8

1 year
2-5 years - She said 2-6
6+ years
Target dates in the future when certain financial objectives are expected to be completed

Question 9

We accumulate things throughout our lives that are known as

Answer 9

Assets

Question 10

Liquid Assets

Answer 10

Held in cash form converted to cash easily

Question 11

Personal Property

Answer 11

Tangible assets that are movable

Question 12

Real Property

Answer 12

Tangible assets that are not movable

Question 13

Investments

Answer 13

Stocks and Bonds

Question 14

Assets are the things we own and liabilities are the things we

Answer 14

owe

Question 15

____1_____ - An employee benefit plan wherein the employer allocated a certain amount of money to each employee and then lets the employee spend_________2___. Plans cover everything from ___3_ to __4____, several levels of ___5_ and ___6_ insurance coverage

Answer 15

1. Flexible Spending or cafeteria plan
2. That money for benefits that suit his/her age, marital status, number of children, level of income and so on
3. Childcare
4. retirement benefits
5. health
6. life

Question 16

Government: taxation and

Answer 16

regulation

Question 17

Business: sustains our _______ system and they create a _____ in which _____ select from an array of goods and services

Answer 17

Free enterprise
Complete environment
consumers

Question 18

Consumer: is the ______. The consumer’s choice of whether to spend or save has a direct impact on present and future circular flows of ____. Consumer’s choices determine the kind of ____ and ____ that businesses will provide.

Answer 18

Central player
Money
Goods
Services

Question 19

The economy - our economy is influenced by interactions amoung

Answer 19

Government, business, and consumers

Question 20

Expansion: Economic phases where the levels of the employment and production are _____ and the Economy is _____; generally accompanied by ____ prices for goods and services

Answer 20

(Upward arrow)
Growing
Rising

Question 21

The phrase of the economic cycle when an expansion ends and a contraction begins

Answer 21

Peak

Question 22

Contraction - the phrase of the economic cycle when real _____ falls

Answer 22

GDP - Gross Domestic Product

Question 23

______ - The phase of the economic cycle when a ____ ends and a/an _____ begins

Answer 23

Trough
Contraction
Expansion

Question 24

A state of the economy in which the general price level is increasing

Answer 24

Inflation

Question 25

Gross Domestic Product - The total of all ______________; used to monitor _____ growth. In a strong economy the GDP level ____ with a high _______.

Answer 25

Goods and services produced in an economy
Economic
Increases
Employment rate

Question 26

_______ - Measure of _____ based on changes in ____ of consumer goods and services

Answer 26

Consumer Price index (CPI)
Inflation
Cost

Question 27

What determines your personal income?

Answer 27

1. Demographics
2. Education
3. Where you live
4. Career