Complete Assessment and Practice Question Bank: Personal Financial Planning 16th Edition | Comprehensive Test Bank with Verified Answers (Chapters 1–15)

TEST BANK for Personal Financial
Planning, 16th Edition by Randy
Billingsley, Lawrence Gitman
ALL CHAPTERS 1-15 WITH VERIFIED
QUESTIONS AND ACCURATE ANSWERS
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, Chapter 1: Understanding the Financial Planning Process

TRUE/FALSE

1. Standard of living is defined as the necessities, comforts, and luxuries desired by an individual or
group.

ACCURATE ANSWER: T PTS: 1 DIF: Easy OBJ: LO: 1-1

NAT: BUSPROG: Reflective thinking STA: DISC: Financial Markets and Interest Rates KEY:
Bloom's: Knowledge



2. Your average propensity to consume is the percentage of each dollar of income, on the average, that is
spent for current needs rather than savings.

ACCURATE ANSWER: T PTS: 1 DIF: Easy OBJ: LO: 1-1

NAT: BUSPROG: Reflective thinking STA: DISC: Financial Markets and Interest Rates KEY:
Bloom's: Knowledge



3. A good financial plan completed when one is in their 30s will typically last a lifetime.

ACCURATE ANSWER: F PTS: 1 DIF: Challenging OBJ: LO: 1-2

NAT: BUSPROG: Reflective thinking STA: DISC: Financial Markets and Interest Rates KEY:
Bloom's: Synthesis



4. Financial planning is a continuing, life-long process.

ACCURATE ANSWER: T PTS: 1 DIF: Easy OBJ: LO: 1-2

NAT: BUSPROG: Reflective thinking STA: DISC: Financial Markets and Interest Rates KEY:
Bloom's: Comprehension



5. Financial planning can improve your standard of living.

ACCURATE ANSWER: T PTS: 1 DIF: Easy OBJ: LO: 1-1

NAT: BUSPROG: Reflective thinking STA: DISC: Financial Markets and Interest Rates KEY:
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Bloom's: Comprehension
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,6. Current consumption is inversely related to saving for the future.

ACCURATE ANSWER: T PTS: 1 DIF: Challenging OBJ: LO: 1-1

NAT: BUSPROG: Reflective thinking STA: DISC: Financial Markets and Interest Rates KEY:
Bloom's: Analysis

7. About 20% of Americans say retirement planning is their most pressing financial concern.

ACCURATE ANSWER: F PTS: 1 DIF: Moderate OBJ: LO: 1-1

NAT: BUSPROG: Reflective thinking STA: DISC: Financial Markets and Interest Rates KEY:
Bloom's: Knowledge



8. The most effective way to achieve financial objectives is through financial planning.

ACCURATE ANSWER: T PTS: 1 DIF: Moderate OBJ: LO: 1-1

NAT: BUSPROG: Reflective thinking STA: DISC: Financial Markets and Interest Rates KEY:
Bloom's: Comprehension



9. Defining financial goals is an important first step in personal financial planning process.

ACCURATE ANSWER: T PTS: 1 DIF: Easy OBJ: LO: 1-2

NAT: BUSPROG: Reflective thinking STA: DISC: Financial Markets and Interest Rates KEY:
Bloom's: Comprehension



10. Two persons with equal average propensities to consume will not necessarily have equal standards of
living because of differences in income.

ACCURATE ANSWER: T PTS: 1 DIF: Challenging OBJ: LO: 1-1

NAT: BUSPROG: Reflective thinking STA: DISC: Financial Markets and Interest Rates KEY:
Bloom's: Evaluation



11. The need for financial planning declines as your income increases.

ACCURATE ANSWER: F PTS: 1 DIF: Moderate OBJ: LO: 1-1
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NAT: BUSPROG: Reflective thinking STA: DISC: Financial Markets and Interest Rates KEY:
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Bloom's: Synthesis
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, 12. Current consumption effects future consumption.

ACCURATE ANSWER: T PTS: 1 DIF: Challenging OBJ: LO: 1-1

NAT: BUSPROG: Reflective thinking STA: DISC: Financial Markets and Interest Rates KEY:
Bloom's: Analysis



13. A person who has $2,000 monthly income and spends $1,800 monthly has an average propensity to
consume of 90%.

ACCURATE ANSWER: T PTS: 1 DIF: Challenging OBJ: LO: 1-1

NAT: BUSPROG: Reflective thinking STA: DISC: Financial Markets and Interest Rates KEY:
Bloom's: Evaluation



14. A person making $35,000 and spending $30,800 has an average propensity to consume of 80%.

ACCURATE ANSWER: F PTS: 1 DIF: Challenging OBJ: LO: 1-1

NAT: BUSPROG: Reflective thinking STA: DISC: Financial Markets and Interest Rates KEY:
Bloom's: Evaluation



15. Most families find it difficult to discuss money matters.

ACCURATE ANSWER: T PTS: 1 DIF: Easy OBJ: LO: 1-2

NAT: BUSPROG: Reflective thinking STA: DISC: Financial Markets and Interest Rates KEY:
Bloom's: Knowledge



16. Average propensity to consume refers to how much of your money you plan to save in your financial
plan.

ACCURATE ANSWER: F PTS: 1 DIF: Challenging OBJ: LO: 1-1

NAT: BUSPROG: Reflective thinking STA: DISC: Financial Markets and Interest Rates KEY:
Bloom's: Comprehension
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