TEST BANK FOR j 4 j 4
Introductionto PersonalFinanceBeginningYourFinancialJourney,2ndEdition John j4 j4 j4 j4 j4 j4 j4 j4 j4 j4
E. Grable, Lance Palmer
j4 j4 j4 j4
Chapter 1-10 j4
Chapter 1 j4 Beginning Your Financial Journey: The Interior Finance Point of View j4 j4 j4 j4 j4 j4 j4 j4 j4
1) Whichof the followingrefers to one's abilityto understand and use personal finance
j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4
information?
j4
A) Financial risk tolerance. j4 j4
B) Financial well-being. j4
C) Financialknowledge. j4
D) Financialability. j4
Answer: C
j4 j 4
Explanation: Financial knowledge is the ability to understand personal finance information. Knowing j 4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4
who you are, where you want to go, and what skills you currentlypossess are essential factors shaping your
j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4
financial journey.
j4 j4
Diff: 1 j4
LO: 1.1,Section1.1 j 4 j4 j4
Bloom: K
j4 j 4
AACSB/ IMA: none;none j4 j4 j 4 j4
AICPA: FC: none
j4 j 4 j4
Min: 1 j 4 j 4
2) Peoplewhobelievethatwhathappenstothemisbasedonfateorluckmightviewtheirfinancial journey
j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4
as being uncertain. This is an example of
j4 j4 j4 j4 j4 j4 j4 j4
A) financial risk tolerance. j4 j4
B) financial literacy. j4
C) feelingsof control. j4 j4
D) financialability. j4
Answer: C
j4 j 4
Explanation: Feelings of control is the amount of control you feel you have when making financial j 4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4
decisions. People who believethat what happens to them isbased on luck or fatemight view their
j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4
financial journey as uncertain.
j4 j4 j4 j4
Diff: 1 j4
LO: 1.1,Section1.1 j 4 j4 j4
Bloom: C
j4 j 4
AACSB/ IMA: none;none j4 j4 j 4 j4
AICPA: FC: none
j4 j 4 j4
Min: 1 j 4 j 4
1
,3) Internal finance includes your j4 j4 j4
A) financial knowledge. j4
B) financial risk tolerance. j4 j4
C) feelingsof control. j4 j4
D) Allofthechoicesarecorrect. j4 j4 j4 j4 j4
Answer: D
j4 j 4
Explanation: Internalfinance isessentiallythe combination of financial knowledge, financial risk j 4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4
tolerance, and feelings of control.
j4 j4 j4 j4 j4
Diff: 1 j4
LO: 1.1,Section1.1
j 4 j4 j4
Bloom: K
j4 j 4
AACSB/ IMA: none;none j4 j4 j 4 j4
AICPA: FC: none
j4 j 4 j4
Min: 1 j 4 j 4
4) Whichof the followingrefers to your confidence and peace of mind regarding your financial
j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4
situation?
j4
A) Financial literacy. j4
B) Financial well-being. j4
C) Financialknowledge. j4
D) Financialability. j4
Answer: B
j4 j 4
Explanation: Financial well-being is your confidence and peace of mind regarding your financial j 4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4
situation.Yourfinancial well-beingwillincrease as you applyyour financialknowledge, develop skills,
j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4
and organize your finances to achieve your personal goals.
j4 j4 j4 j4 j4 j4 j4 j4 j4
Diff: 2 j4
LO: 1.1, Section 1.1j 4 j4 j4
Bloom: C
j4 j 4
AACSB/ IMA: none;none j4 j4 j 4 j4
AICPA: FC: none
j4 j 4 j4
Min: 1 j 4 j 4
5) Inadditiontofinancialknowledge,whichofthefollowingisimportantinshapingyourviewof the
j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4
financial world?
j4 j4
A) Financial risk tolerance, only. j4 j4 j4
B) Feelings of control, only. j4 j4 j4
C) Financialwell-being only. j4 j4
D) Financialrisktoleranceandfeelingsofcontrol. j4 j4 j4 j4 j4 j4
Answer: D
j4 j 4
Explanation: Ourfinancialdecisionscanbebasedonabiasedviewofthefinancialworld,which is j 4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4
based on the combination of our financial knowledge, financial risk tolerance, and feelings of control.
j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4
Diff: 2 j4
LO: 1.1,Section1.1
j 4 j4 j4
Bloom: C
j4 j 4
AACSB/ IMA: none;none j4 j4 j 4 j4
AICPA: FC: none
j4 j 4 j4
Min: 1 j 4 j 4
2
,6) Whichof the followingrefers to your willingness to engage in financial endeavors that have
j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4
uncertain outcomes?
j4 j4
A) Financial literacy. j4
B) Financial risk tolerance. j4 j4
C) Financialknowledge. j4
D) Financialability. j4
Answer: B
j4 j 4
Explanation: Yourfinancialrisk toleranceis your willingness to engage in financialendeavors that j 4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4
have uncertain outcomes.
j4 j4 j4
Diff: 1 j4
LO: 1.1,Section1.1
j 4 j4 j4
Bloom: K
j4 j 4
AACSB/ IMA: none;none j4 j4 j 4 j4
AICPA: FC: none
j4 j 4 j4
Min: 1 j 4 j 4
7) Whichof the followingismeasured byadding up how much the United States produces in goods
j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4
and services in a year?
j4 j4 j4 j4 j4
A) Gross domestic product. j4 j4
B) The cost of goods sold. j4 j4 j4 j4
C) Financialliteracy. j4
D) Financialrisktolerance. j4 j4
Answer: A
j4 j 4
Explanation: Grossdomestic product (GDP) is measuredbyadding up how much a country produces in j 4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4
goods and services in a year.
j4 j4 j4 j4 j4 j4
Diff: 1 j4
LO: 1.1,Section1.1
j 4 j4 j4
Bloom: K
j4 j 4
AACSB/ IMA: none;none j4 j4 j 4 j4
AICPA: FC: none
j4 j 4 j4
Min: 1 j 4 j 4
8) How much of GDP consists of consumer spending?
j4 j4 j4 j4 j4 j4 j4
A) 46%.
B) 50%.
C) 60%.
D) 66%.
Answer: D j 4 j 4
Explanation: In 2020, the U.S. GDP was $19.80 trillionand nearlytwo-thirds (66%) of GDP consists j 4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4
of consumer spending.
j4 j4 j4
Diff: 1 j4
LO: 1.1,Section1.1
j 4 j4 j4
Bloom: K
j4 j 4
AACSB/ IMA: none;none j4 j4 j 4 j4
AICPA: FC: none
j4 j 4 j4
Min: 1 j 4 j 4
3
, 9) Whichofthe following willhelp yououtline exactlyhowtoapply your financialknowledgeto achieve j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4
your life vision?
j4 j4 j4
A) Financial literacy. j4
B) Financialroadmap. j4
C) Financialknowledge. j4
D) Financialability. j4
Answer: B
j4 j 4
Explanation: Envisioningthe future is not easy, but having a long-term life vision and a plan requires j 4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4
a financial roadmap, a course that will help you outline how to apply your financial knowledge to
j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4
achieve your life vision.
j4 j4 j4 j4
Diff: 1 j4
LO: 1.1,Section1.1 j 4 j4 j4
Bloom: K
j4 j 4
AACSB/ IMA: none;none j4 j4 j 4 j4
AICPA: FC: none
j4 j 4 j4
Min: 1 j 4 j 4
10) An action item that should be a partof everyone's journeyto financial well-beingincludes which
j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4
of the following?
j4 j4 j4
A) Keeping good records. j4 j4
B) Spending less than you earn. j4 j4 j4 j4
C) Maintainingappropriate insurance. j4 j4
D) Allofthechoicesarecorrect. j4 j4 j4 j4 j4
Answer: D
j4 j 4
Explanation: Theactionsthatcanhelpyoutomanageyourfinancialwell-beinginclude:keeping good j 4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4
records, earn money, manage taxes, spend less than you earn, save wisely, invest strategically,
j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4
maintain appropriate insurance, and plan for your future.
j4 j4 j4 j4 j4 j4 j4 j4
Diff: 2 j4
LO: 1.1,Section1.1 j 4 j4 j4
Bloom: C
j4 j 4
AACSB/ IMA: none;none j4 j4 j 4 j4
AICPA: FC: none
j4 j 4 j4
Min: 1 j 4 j 4
11) Howdoes consumer spending affect GDP? j4 j4 j4 j4 j4
A) If spending decreases, GDP increases.
j4 j4 j4 j4
B) If spendingincreases, GDP decreases.
j4 j4 j4 j4
C) If spending increases, GDP increases.
j4 j4 j4 j4
D) Consumerspendingdoesn'taffectGDP. j4 j4 j4 j4
Answer: C
j4 j 4
Explanation: Gross domestic product (GDP) is measured by adding up how much a country j 4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4
produces in goods and services in a year. Everything from the value of cars to the value of the shrubsand
j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4
flowerspurchasedatalocalstoreisincludedinGDP.Sincenearlytwo-thirds(66%)of GDPconsists of
j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4
consumerspending;themoreconsumersspend,thelargerGDP becomes.Onthe other hand, if
j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4
consumption slows down, GDP goes down.
j4 j4 j4 j4 j4 j4
Diff: 2 j4
LO: 1.1, Section 1.1
j 4 j 4 j4 j4
4
Introductionto PersonalFinanceBeginningYourFinancialJourney,2ndEdition John j4 j4 j4 j4 j4 j4 j4 j4 j4 j4
E. Grable, Lance Palmer
j4 j4 j4 j4
Chapter 1-10 j4
Chapter 1 j4 Beginning Your Financial Journey: The Interior Finance Point of View j4 j4 j4 j4 j4 j4 j4 j4 j4
1) Whichof the followingrefers to one's abilityto understand and use personal finance
j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4
information?
j4
A) Financial risk tolerance. j4 j4
B) Financial well-being. j4
C) Financialknowledge. j4
D) Financialability. j4
Answer: C
j4 j 4
Explanation: Financial knowledge is the ability to understand personal finance information. Knowing j 4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4
who you are, where you want to go, and what skills you currentlypossess are essential factors shaping your
j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4
financial journey.
j4 j4
Diff: 1 j4
LO: 1.1,Section1.1 j 4 j4 j4
Bloom: K
j4 j 4
AACSB/ IMA: none;none j4 j4 j 4 j4
AICPA: FC: none
j4 j 4 j4
Min: 1 j 4 j 4
2) Peoplewhobelievethatwhathappenstothemisbasedonfateorluckmightviewtheirfinancial journey
j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4
as being uncertain. This is an example of
j4 j4 j4 j4 j4 j4 j4 j4
A) financial risk tolerance. j4 j4
B) financial literacy. j4
C) feelingsof control. j4 j4
D) financialability. j4
Answer: C
j4 j 4
Explanation: Feelings of control is the amount of control you feel you have when making financial j 4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4
decisions. People who believethat what happens to them isbased on luck or fatemight view their
j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4
financial journey as uncertain.
j4 j4 j4 j4
Diff: 1 j4
LO: 1.1,Section1.1 j 4 j4 j4
Bloom: C
j4 j 4
AACSB/ IMA: none;none j4 j4 j 4 j4
AICPA: FC: none
j4 j 4 j4
Min: 1 j 4 j 4
1
,3) Internal finance includes your j4 j4 j4
A) financial knowledge. j4
B) financial risk tolerance. j4 j4
C) feelingsof control. j4 j4
D) Allofthechoicesarecorrect. j4 j4 j4 j4 j4
Answer: D
j4 j 4
Explanation: Internalfinance isessentiallythe combination of financial knowledge, financial risk j 4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4
tolerance, and feelings of control.
j4 j4 j4 j4 j4
Diff: 1 j4
LO: 1.1,Section1.1
j 4 j4 j4
Bloom: K
j4 j 4
AACSB/ IMA: none;none j4 j4 j 4 j4
AICPA: FC: none
j4 j 4 j4
Min: 1 j 4 j 4
4) Whichof the followingrefers to your confidence and peace of mind regarding your financial
j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4
situation?
j4
A) Financial literacy. j4
B) Financial well-being. j4
C) Financialknowledge. j4
D) Financialability. j4
Answer: B
j4 j 4
Explanation: Financial well-being is your confidence and peace of mind regarding your financial j 4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4
situation.Yourfinancial well-beingwillincrease as you applyyour financialknowledge, develop skills,
j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4
and organize your finances to achieve your personal goals.
j4 j4 j4 j4 j4 j4 j4 j4 j4
Diff: 2 j4
LO: 1.1, Section 1.1j 4 j4 j4
Bloom: C
j4 j 4
AACSB/ IMA: none;none j4 j4 j 4 j4
AICPA: FC: none
j4 j 4 j4
Min: 1 j 4 j 4
5) Inadditiontofinancialknowledge,whichofthefollowingisimportantinshapingyourviewof the
j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4
financial world?
j4 j4
A) Financial risk tolerance, only. j4 j4 j4
B) Feelings of control, only. j4 j4 j4
C) Financialwell-being only. j4 j4
D) Financialrisktoleranceandfeelingsofcontrol. j4 j4 j4 j4 j4 j4
Answer: D
j4 j 4
Explanation: Ourfinancialdecisionscanbebasedonabiasedviewofthefinancialworld,which is j 4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4
based on the combination of our financial knowledge, financial risk tolerance, and feelings of control.
j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4
Diff: 2 j4
LO: 1.1,Section1.1
j 4 j4 j4
Bloom: C
j4 j 4
AACSB/ IMA: none;none j4 j4 j 4 j4
AICPA: FC: none
j4 j 4 j4
Min: 1 j 4 j 4
2
,6) Whichof the followingrefers to your willingness to engage in financial endeavors that have
j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4
uncertain outcomes?
j4 j4
A) Financial literacy. j4
B) Financial risk tolerance. j4 j4
C) Financialknowledge. j4
D) Financialability. j4
Answer: B
j4 j 4
Explanation: Yourfinancialrisk toleranceis your willingness to engage in financialendeavors that j 4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4
have uncertain outcomes.
j4 j4 j4
Diff: 1 j4
LO: 1.1,Section1.1
j 4 j4 j4
Bloom: K
j4 j 4
AACSB/ IMA: none;none j4 j4 j 4 j4
AICPA: FC: none
j4 j 4 j4
Min: 1 j 4 j 4
7) Whichof the followingismeasured byadding up how much the United States produces in goods
j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4
and services in a year?
j4 j4 j4 j4 j4
A) Gross domestic product. j4 j4
B) The cost of goods sold. j4 j4 j4 j4
C) Financialliteracy. j4
D) Financialrisktolerance. j4 j4
Answer: A
j4 j 4
Explanation: Grossdomestic product (GDP) is measuredbyadding up how much a country produces in j 4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4
goods and services in a year.
j4 j4 j4 j4 j4 j4
Diff: 1 j4
LO: 1.1,Section1.1
j 4 j4 j4
Bloom: K
j4 j 4
AACSB/ IMA: none;none j4 j4 j 4 j4
AICPA: FC: none
j4 j 4 j4
Min: 1 j 4 j 4
8) How much of GDP consists of consumer spending?
j4 j4 j4 j4 j4 j4 j4
A) 46%.
B) 50%.
C) 60%.
D) 66%.
Answer: D j 4 j 4
Explanation: In 2020, the U.S. GDP was $19.80 trillionand nearlytwo-thirds (66%) of GDP consists j 4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4
of consumer spending.
j4 j4 j4
Diff: 1 j4
LO: 1.1,Section1.1
j 4 j4 j4
Bloom: K
j4 j 4
AACSB/ IMA: none;none j4 j4 j 4 j4
AICPA: FC: none
j4 j 4 j4
Min: 1 j 4 j 4
3
, 9) Whichofthe following willhelp yououtline exactlyhowtoapply your financialknowledgeto achieve j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4
your life vision?
j4 j4 j4
A) Financial literacy. j4
B) Financialroadmap. j4
C) Financialknowledge. j4
D) Financialability. j4
Answer: B
j4 j 4
Explanation: Envisioningthe future is not easy, but having a long-term life vision and a plan requires j 4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4
a financial roadmap, a course that will help you outline how to apply your financial knowledge to
j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4
achieve your life vision.
j4 j4 j4 j4
Diff: 1 j4
LO: 1.1,Section1.1 j 4 j4 j4
Bloom: K
j4 j 4
AACSB/ IMA: none;none j4 j4 j 4 j4
AICPA: FC: none
j4 j 4 j4
Min: 1 j 4 j 4
10) An action item that should be a partof everyone's journeyto financial well-beingincludes which
j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4
of the following?
j4 j4 j4
A) Keeping good records. j4 j4
B) Spending less than you earn. j4 j4 j4 j4
C) Maintainingappropriate insurance. j4 j4
D) Allofthechoicesarecorrect. j4 j4 j4 j4 j4
Answer: D
j4 j 4
Explanation: Theactionsthatcanhelpyoutomanageyourfinancialwell-beinginclude:keeping good j 4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4
records, earn money, manage taxes, spend less than you earn, save wisely, invest strategically,
j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4
maintain appropriate insurance, and plan for your future.
j4 j4 j4 j4 j4 j4 j4 j4
Diff: 2 j4
LO: 1.1,Section1.1 j 4 j4 j4
Bloom: C
j4 j 4
AACSB/ IMA: none;none j4 j4 j 4 j4
AICPA: FC: none
j4 j 4 j4
Min: 1 j 4 j 4
11) Howdoes consumer spending affect GDP? j4 j4 j4 j4 j4
A) If spending decreases, GDP increases.
j4 j4 j4 j4
B) If spendingincreases, GDP decreases.
j4 j4 j4 j4
C) If spending increases, GDP increases.
j4 j4 j4 j4
D) Consumerspendingdoesn'taffectGDP. j4 j4 j4 j4
Answer: C
j4 j 4
Explanation: Gross domestic product (GDP) is measured by adding up how much a country j 4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4
produces in goods and services in a year. Everything from the value of cars to the value of the shrubsand
j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4
flowerspurchasedatalocalstoreisincludedinGDP.Sincenearlytwo-thirds(66%)of GDPconsists of
j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4
consumerspending;themoreconsumersspend,thelargerGDP becomes.Onthe other hand, if
j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4 j4
consumption slows down, GDP goes down.
j4 j4 j4 j4 j4 j4
Diff: 2 j4
LO: 1.1, Section 1.1
j 4 j 4 j4 j4
4
