Intro to Finance Chapter 1 - 2 Unit Test

Personal finance refers to all the money decisions a person or family must make in order to earn, budget, save, and spend money over time.

• True

• False

1. Personal finance is about _______% behavior and _______% knowledge.

• 20, 80

• 60, 40

• 80, 20

• 10, 90

Earnings is the measurement of the total dollar value of a person’s or business’ assets minus liabilities.

• True

• False

A liability and a debt are the same thing.

• True

• False

Assets can be described as:

• something that goes down in value over time

• something you owe

• something you own that has value

• your assets minus liabilities

It is impossible to save money when you have a small income.

• True

• False

Which of the following allows invested money to grow over time?

• compound interest

• taxes

• inflation

• wealth

Global demand is the condition of having unlimited wants but limited resources.

• True

• False

A plan for spending is called a(n):

• checking account

• scarcity

• economy

• budget

Money set aside for five years or less, including your emergency fund, is considered saving. Money set aside for more than five years is considered investing.

• True

• False