FINANCIAL LITERACY FINAL EXAM AND
ANSWERS.
Key components of financial planning include all of the following except:
Write out a detailed plan for accomplishing your goals
Replace money myths with money truths
Buy on credit whenever possible
Regularly monitor and re-assess your financial plan - Answers-Buy on credit whenever
possible
Which of the following statements best describes how Americans are
Credit is marketed so well that we desire to have it while completely dismissing the fact
that interest rates and fees continue to destroy our financial well-being
We are taught that we can buy happiness
Buying things on credit has become acceptable in our culture
We are driven by consumerism - Answers-Credit is marketed so well that we desire to
have it while completely dismissing the fact that interest rates and fees continue to
destroy our financial well-being
Personal financial success is primarily the result of:
Managing your money behavior
Winning the lottery
Generous welfare and unemployment programs
Inheriting money from your parents - Answers-Managing your money behavior
Which of the following statements best explains why income alone does not determine
wealth?
Investing is the only factor that contributes to wealth building.
Income alone does determine a person's wealth
Only people who are natural savers can become wealthy.
How much money a person makes does not dictate their spending and saving behavior
- Answers-How much money a person makes does not dictate their spending and
saving behavior
Which of the following is a consequence of spending more than you make?
Missed opportunity to save and invest
Stress
A cycle of debt
All of the above - Answers-All of the above
When it comes to managing money, success is about _____% knowledge and____%
behavior. - Answers-20, 80
, The widespread financial insecurity of Americans is primarily because: - Answers-The
savings rate of Americans is low and many borrow in order spend more than they earn
Why was the use of credit uncommon prior to 1917?
Laws prevented lenders from charging high interest
Borrowing money was generally not socially
Lending money to others was not
All of the above - Answers-All of the above
When it comes to personal finance, the math is easy. Whatʹs challenging is managing
your - Answers-Behavior
During the Great Depression, New Deal policy makers came up with mortgage (home
loans) and consumer lending policies that convinced commercial banks that: - Answers-
Consumer credit could be profitable
What is the First Foundation? - Answers-Save a $500 emergency fund
Instead of borrowing money for large purchases, you should set money aside in a
________ over time and pay with cash - Answers-Sinking Fund
This principle suggests that a certain amount of money today has different buying power
than the same amount of money in the future. This is due to both the opportunity to earn
interest on the money and because inflation will drive up, thereby changing the ʺvalueʺ
of the money. - Answers-Time value of money
For which of the following should you save?
Purchases
Wealth
Emergency
All of the above - Answers-All of the above
At your age, a fully funded emergency fund should be: - Answers-$500
Which of the following is not a reason your emergency fund should be kept in a
separate savings account away from your spending money?
So that you do not get your spending and saving money confused
So that it is clear what money is only to be used for emergencies.
So that it is not too easy to access.
So that your emergency fund savings can earn a lot of interest. - Answers-So that it is
clear what money is only to be used for emergencies
Why is having a fully funded emergency fund so important when it comes to your
financial well-being? - Answers-The purpose of an emergency fund is to set money
aside for unexpected financial emergencies and to provide a sense of financial security
ANSWERS.
Key components of financial planning include all of the following except:
Write out a detailed plan for accomplishing your goals
Replace money myths with money truths
Buy on credit whenever possible
Regularly monitor and re-assess your financial plan - Answers-Buy on credit whenever
possible
Which of the following statements best describes how Americans are
Credit is marketed so well that we desire to have it while completely dismissing the fact
that interest rates and fees continue to destroy our financial well-being
We are taught that we can buy happiness
Buying things on credit has become acceptable in our culture
We are driven by consumerism - Answers-Credit is marketed so well that we desire to
have it while completely dismissing the fact that interest rates and fees continue to
destroy our financial well-being
Personal financial success is primarily the result of:
Managing your money behavior
Winning the lottery
Generous welfare and unemployment programs
Inheriting money from your parents - Answers-Managing your money behavior
Which of the following statements best explains why income alone does not determine
wealth?
Investing is the only factor that contributes to wealth building.
Income alone does determine a person's wealth
Only people who are natural savers can become wealthy.
How much money a person makes does not dictate their spending and saving behavior
- Answers-How much money a person makes does not dictate their spending and
saving behavior
Which of the following is a consequence of spending more than you make?
Missed opportunity to save and invest
Stress
A cycle of debt
All of the above - Answers-All of the above
When it comes to managing money, success is about _____% knowledge and____%
behavior. - Answers-20, 80
, The widespread financial insecurity of Americans is primarily because: - Answers-The
savings rate of Americans is low and many borrow in order spend more than they earn
Why was the use of credit uncommon prior to 1917?
Laws prevented lenders from charging high interest
Borrowing money was generally not socially
Lending money to others was not
All of the above - Answers-All of the above
When it comes to personal finance, the math is easy. Whatʹs challenging is managing
your - Answers-Behavior
During the Great Depression, New Deal policy makers came up with mortgage (home
loans) and consumer lending policies that convinced commercial banks that: - Answers-
Consumer credit could be profitable
What is the First Foundation? - Answers-Save a $500 emergency fund
Instead of borrowing money for large purchases, you should set money aside in a
________ over time and pay with cash - Answers-Sinking Fund
This principle suggests that a certain amount of money today has different buying power
than the same amount of money in the future. This is due to both the opportunity to earn
interest on the money and because inflation will drive up, thereby changing the ʺvalueʺ
of the money. - Answers-Time value of money
For which of the following should you save?
Purchases
Wealth
Emergency
All of the above - Answers-All of the above
At your age, a fully funded emergency fund should be: - Answers-$500
Which of the following is not a reason your emergency fund should be kept in a
separate savings account away from your spending money?
So that you do not get your spending and saving money confused
So that it is clear what money is only to be used for emergencies.
So that it is not too easy to access.
So that your emergency fund savings can earn a lot of interest. - Answers-So that it is
clear what money is only to be used for emergencies
Why is having a fully funded emergency fund so important when it comes to your
financial well-being? - Answers-The purpose of an emergency fund is to set money
aside for unexpected financial emergencies and to provide a sense of financial security
