Financial Literacy Exam 1 Practice Question Set

Front

Financial planning is best described as:

Back

A lifelong process of managing money to meet goals

Front

Which of the following is a step in the financial planning process? Options: Ignoring changes in your income, Establishing financial goals, Spending without tracking, Assuming constant inflation

Back

Establishing financial goals

Front

Which of the following is an example of unearned income? Salary, Wages, Dividends, Overtime pay

Back

Dividends

Front

Inflation is best defined as:

Back

An increase in the general level of prices over time

Front

If inflation is higher than expected, who benefits most? Options: Lenders, Borrowers, Retirees on fixed pensions, Savers

Back

Borrowers

Front

If your income rises 4% and inflation rises 2%, your real income:

Back

Increases by 2%

Front

What reduces the purchasing power of money?

Back

Inflation

Front

Which is NOT a component of financial planning?

Back

Avoiding all expenditures

Front

Which type of goal is 'paying off a student loan within 5 years'? Options: Short-term goal, Intermediate goal, Long-term goal, Lifetime goal

Back

Intermediate goal

Front

An increase in nominal income with no change in real income occurs when:

Back

Inflation rate equals income growth rate