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Personal Finance , 14th Edition E. Thomas Garman TEST BANK, Exams of Nursing

Research College of NursingNursing

"Accurate test questions with clear answers to help you ace your exam."

Typology: Exams

2024/2025

Available from 05/09/2025

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True / False
1. Financial literacy is knowledge of facts, concepts, principles, and technological tools that are fundamental to being
smart about money.
a. True
b. False
ANSWER: True
2. Being financially responsible is being knowledgeable about facts, concepts, principles, and technological tools that are
fundamental to being smart about money.
a. True
b. False
ANSWER: False
3. Personal finance involves how people spend, save, protect, and invest their financial resources.
a. True
b. False
ANSWER: True
4. Financial success is defined as having high wealth.
a. True
b. False
ANSWER: False
5. Financial security is defined as having a high income.
a. True
b. False
ANSWER: False
6. People who save and invest are much more likely to have funds for future consumption.
a. True
b. False
ANSWER: True
7. Standard of living refers to an individual's level of spending and consumption.
a. True
b. False
ANSWER: False
8. Standard of living is what individuals or groups aspire to attain, and level of living is the level of wealth, comfort,
materials goods, and necessities one is currently living with.
a. True
b. False
ANSWER: True
9.Financialsecurityorwealthrequiresyoutospendlessthanyouearn.
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Download Personal Finance , 14th Edition E. Thomas Garman TEST BANK and more Exams Nursing in PDF only on Docsity!

True / False

  1. Financial literacy is knowledge of facts, concepts, principles, and technological tools that are fundamental to being smart about money. a. True b. False

ANSWER: True

  1. Being financially responsible is being knowledgeable about facts, concepts, principles, and technological tools that are fundamental to being smart about money. a. True b. False

ANSWER: False

  1. Personal finance involves how people spend, save, protect, and invest their financial resources. a. True b. False

ANSWER: True

  1. Financial success is defined as having high wealth. a. True b. False

ANSWER: False

  1. Financial security is defined as having a high income. a. True b. False

ANSWER: False

  1. People who save and invest are much more likely to have funds for future consumption. a. True b. False

ANSWER: True

  1. Standard of living refers to an individual's level of spending and consumption. a. True b. False

ANSWER: False

  1. Standard of living is what individuals or groups aspire to attain, and level of living is the level of wealth, comfort, materials goods, and necessities one is currently living with. a. True b. False

ANSWER: True

9.Financialsecurityorwealthrequiresyoutospendlessthanyouearn.

a. True b. False

ANSWER: True

  1. A business cycle is a wavelike pattern of economic activity that includes an expansion, peak, contraction, and trough. a. True b. False

ANSWER: True

  1. The expansion phase is the preferred stage of the economic cycle. a. True b. False

ANSWER: True

  1. Since it is impossible to make precise forecasts about economic trends, we can ignore inflation and interest rates when planning our finances. a. True b. False

ANSWER: False

  1. The typical U.S. recession is marked by an average economic decline of 2 percent. a. True b. False

ANSWER: True

  1. The gross domestic product broadly measures the nation’s economic health. a. True b. False

ANSWER: True

  1. Procyclical economic indicators move in the same direction as the economy. a. True b. False

ANSWER: True

  1. The index of leading economic indicators is a composite index reported monthly that suggests the future direction of the U.S. economy. a. True b. False

ANSWER: True

  1. The index of leading economic indicators averages eight components of growth from various segments of the economy. a. True

b. False

ANSWER: False

  1. The consumer price index is a broad measure of price changes in all goods and services purchased for consumption by urban households. a. True b. False

ANSWER: True

  1. When prices rise, the dollar's purchasing power declines by the same percentage. a. True b. False

ANSWER: False

  1. The term interest refers to the price of money. a. True b. False

ANSWER: True

  1. Interest rates on home mortgages and other loans tend to fall during high inflation. a. True b. False

ANSWER: False

  1. All things considered, a saver who earns 4 percent interest on a savings account when the rate of inflation is 4 percent is losing real purchasing power. a. True b. False

ANSWER: True

  1. Smart investors recognize that inflation risk is higher for long-term lending than for short-term lending. a. True b. False

ANSWER: True

  1. When forecasting long-term inflation rates for financial planning purposes, it is better to err on the low side rather than on the high side. a. True b. False

ANSWER: False

  1. Interest rates earned on short-term investments are generally lower than those earned on longer-term investments. a. True b. False

ANSWER: True

  1. The rate of interest and the inflation rate generally move in the same directions; when one goes up, the other also goes up. a. True b. False

ANSWER: True

  1. When one forgoes buying a new TV because they spend the money on college books, the TV is the opportunity cost of buying the books. a. True b. False

ANSWER: True

  1. By considering opportunity costs, we can optimize our financial decisions. a. True b. False

ANSWER: True

  1. The opportunity cost of a decision is the value of the next best alternative that must be foregone and addresses the personal consequences of choices. a. True b. False

ANSWER: True

  1. Marginal cost is the additional cost of one more unit of something. a. True b. False

ANSWER: True

  1. According to economic theory, people will seek additional utility if marginal utility exceeds marginal cost. a. True b. False

ANSWER: True

  1. Most financially successful taxpayers must pay federal income taxes at the 22 percent marginal tax rate. a. True b. False

ANSWER: True

  1. Financially successful people often pay U.S. federal income taxes at the 22 percent, or higher, marginal tax rate. a. True b. False

ANSWER: True

  1. One's average federal income tax rate is generally equal to one's marginal tax rate.
  1. Compounding is the basis for all time value of money considerations. a. True b. False

ANSWER: True

  1. Future value is the valuation of an asset at some future date. a. True b. False

ANSWER: True

  1. Present value is also known as direct value. a. True b. False

ANSWER: False

  1. Present value is the current value of an asset (or stream of assets) of a future value (or stream of assets) to be received on a future date. a. True b. False

ANSWER: True

  1. The present value of an annuity is the future worth of a stream of payments to be received in the future. a. True b. False

ANSWER: False

  1. Obsolete knowledge is what we believe may have been valid at one time. a. True b. False

ANSWER: True

  1. Financial well-being is a state in which a person can feel secure in their financial future. a. True b. False

ANSWER: True

  1. Capitalism defines the U.S. economy. a. True b. False

ANSWER: True

  1. The sharing economy refers to P2P access to goods and services. a. True b. False

ANSWER: True

Multiple Choice

  1. What aspect or aspects does the study of personal finance entail? a. How people spend their financial resources b. How people save their financial resources c. How people invest their financial resources d. All of these.

ANSWER: d

  1. Drew and Alex are saving monthly to buy a home, but they are currently renting an apartment. What is the apartment considered to be a part of? a. Their standard of living b. Their level of living c. Their savings d. Personal inflation rate

ANSWER: b

  1. To achieve one's financial objectives, it is necessary to restrain from which of the following? a. Current consumption b. Savings c. Investment d. Future earnings

ANSWER: a

  1. How is financial success defined? a. As the achievement of a financially secure retirement b. As the achievement of desired, planned, or attempted financial aspirations c. As the achievement of vast wealth d. As the achievement of a comfortable lifestyle

ANSWER: b

  1. Which of the following should be the easiest for a person to forecast? a. Interest rates b. Inflation c. Income d. Economic growth

ANSWER: c

  1. Which of the following is the preferred phase of the economic cycle? a. Expansion b. Peak c. Trough
  1. Which of the following helps to understand the future direction of the economy? a. Interest rates and inflation b. Interest rates and the gross domestic product c. The consumer confidence index and the index of leading economic indicators d. Inflation and the index of leading economic indicators

ANSWER: c

  1. Which of the following measures the value of all goods and services produced in the United States? a. Consumer price index b. Index of leading economic indicators c. Federal funds rate d. Gross domestic product

ANSWER: d

  1. Which of the following economic indicators tends to move in the opposite direction of where the economy is headed? a. Procyclical indicators b. Employment rate c. Gross domestic product d. Countercyclical indicators

ANSWER: d

  1. Cameron Palmer received a $2,500 raise this year. This raise increased his salary as an associate TV producer from $50,000 to $52,500. What percentage increase in nominal income did Cameron receive? a. 2.5 percent b. 5.9 percent c. 5.0 percent d. 7.8 percent

ANSWER: c

  1. Jeremiah and Jasmine's family income increased from $60,000 to $63,600 in the past year. Inflation was 2 percent over the same time period. Which of the following is true regarding Jeremiah and Jasmine's income? a. Their nominal income increased 6 percent. b. Their nominal income increased 5 percent. c. Their real income decreased 2 percent. d. Their real income decreased 5 percent.

ANSWER: a

  1. Jeremiah and Jasmine's family income increased from $60,000 to $63,600 in the past year. Inflation was 2 percent over the same time period. How much is Jeremiah and Jasmine’s real income after the $3,000 increase in income? a. $62, b. $61, c. $60, d. $58,

ANSWER: a

  1. If your income increased from $21,000 to $26,000 during a period when the rate of inflation was 4 percent, your real income after the raise was a. $23,000. b. $24,000. c. $25,000. d. $26,

ANSWER: c

  1. Makayla, a college teaching assistant, received a raise of $800 from $18,000 to $18,800 this year. If inflation was 3 percent over the same period, which of the following is true? a. Makayla’s increase in real income was $800. b. Makayla’s increase in real income was 4.4 percent. c. Makayla’s increase in real income was $252. d. Makayla’s decrease in real income was $252.

ANSWER: c

  1. The U.S. government measures inflation using which of the following? a. Gross domestic product b. Index of leading economic indicators c. Consumer confidence index d. Consumer price index

ANSWER: d

  1. If the consumer price index was 259 in 2020 and 297 in 2022 how much did prices increase during this time period? a. 4.9 percent b. 1.2 percent c. 16 percent d. 15 percent

ANSWER: d

  1. If the consumer price index was 100 in 1984 and 297 in 2022, how much did prices increase during this period? a. 36 percent b. 72 percent c. 144 percent d. 197 percent

ANSWER: d

  1. If the consumer price index was 100 in 1984 and 297 in 2022, the purchasing power of the dollar a. fell 144 percent. b. fell 66 percent. c. rose 144 percent. d. rose 59 percent.

ANSWER: c

  1. Braxton and Kaih are shopping for their first home. They have found two houses that are nearly identical except for their locations. One house costs $250,000 and is 15 miles from their places of employment. The second house costs $275,000, but it is within five miles of their work. Now Braxton and Kaih are trying to decide if living 10 miles closer to their workplaces is worth the extra $25,000 in the house cost. Which decision-making concept are they using? a. Opportunity cost b. Marginal analysis c. Time value of money d. Total utility

ANSWER: b

  1. Brandon is going to purchase a hi-def, flat-screen TV. He has decided on everything except the screen size. The unit with the 50-inch screen costs $300, while the unit with the 55-inch screen costs $450. In making this decision, which concept should Brandon use? a. Marginal utility b. Time value of money c. Total utility d. Marginal tax rates

ANSWER: a

  1. Daniel just received a $2,000 end-of-year bonus from his employer. Suppose he pays a 22 percent marginal tax rate for federal income taxes. In that case, his state income tax is 5 percent, and the Social Security tax rate is 7.65 percent. Approximately, how much of the $2,000 bonus will Daniel have left to spend on holiday gifts? a. $2, b. $1, c. $1, d. $

ANSWER: c

  1. Demarcus is a college student who has $5,000 in savings that he earned from his summer job. He plans to leave the $45,000 in a 6 percent certificate of deposit (CD) for three years, but his banker has asked Demarcus whether he wants the interest earned on the CD mailed to him at the end of each year or reinvested in the CD. Approximately how much more will Demarcus earn if he decides to reinvest the interest rather than withdraw the interest income each year? a. $ b. $5, c. $15, d. $

ANSWER: b

  1. Grandma Wiley has just put $10,000 into an investment earning 6 percent a year for her grandson's college education. How much will be in the account in 10 years, assuming all the interest remains in the account? a. $19, b. $21, c. $17, d. $21,

ANSWER: c

  1. Diamond and Roberto just won $10,000 in the Pennsylvania state lottery. They now decide to spend $3,000 and put the remaining $7,000 in an investment earning 8 percent compounded annually. If they use the money in that investment for a vacation in five years, approximately how much will they have available to spend on that vacation? a. $14, b. $10, c. $10, d. $9,

ANSWER: c

  1. Housing values are appreciating at a rate of 3 percent a year. How much will your $100,000 house be worth in 10 years if this appreciation rate continues? a. $134, b. $146, c. $155, d. $174,

ANSWER: a

  1. Sanjay invested $10,000 in a security that will double in value in eight years. Approximately what annual rate of return is this investment making? a. 9.0 percent b. 7.2 percent c. 6.3 percent d. 5.8 percent

ANSWER: a

  1. The price of houses has been increasing at an annual rate of 6 percent nationally. How many years will it take for costs to double at this rate? a. 7 b. 12 c. 15 d. 18

ANSWER: b

  1. Alyssa has the opportunity to receive $15,000 now or $18,000 in four years. If Alyssa can earn 6 percent on her investments, what is the present value of the $15,000 payment? a. $15, b. $13, c. $11, d. $14,

ANSWER: d

  1. What is the current value of an asset to be received in the future? a. Present value

a. $3, b. $3, c. $4, d. $

ANSWER: b

  1. Jackson Corporation’s 2019 sales were $5 million. If sales increase by 10 percent per year, what will sales be in 2024? a. $8.053 million b. $13.75 million c. $11.52 million d. $10 million

ANSWER: a

True / False

  1. Effective career planning can align your interests and abilities with employer’s expectations. a. True b. False

ANSWER: True

  1. You should avoid taking a job if the geographic location is not what you want. a. True b. False

ANSWER: False

  1. The final step in career planning is to clarify your values and interests. a. True b. False

ANSWER: False

  1. Family versus satisfying career, privacy versus social networking, and material possessions versus financial security are examples of conflicting values. a. True b. False

ANSWER: True

  1. Interest inventories are the qualities that allow you to perform job-related tasks. a. True b. False

ANSWER: True

  1. Values are either right or wrong. a. True b. False

ANSWER: False

  1. A career plan provides guidance throughout your career and during future education and work-related experiences. a. True b. False

ANSWER: True

  1. A job referral is generally not included in the cover letter. a. True b. False

ANSWER: False

  1. A referral should always include a letter of recommendation. a. True

b. False

ANSWER: True

  1. Tuition reimbursement, paid vacation, and health care are examples of nonsalary benefits. a. True b. False

ANSWER: True

  1. Employee benefits typically account for about 30 percent of the salary. a. True b. False

ANSWER: True

  1. Salaried employees are not paid overtime, and the majority of college graduates have salaried positions. a. True b. False

ANSWER: True

  1. Under COBRA provisions, you have the right to continue your health insurance coverage for a specified period of time after leaving an employer by paying the premiums yourself. a. True b. False

ANSWER: True

  1. More than 40 percent of workers cash out all of the money they have accrued in their employer-sponsored retirement plan when changing jobs. a. True b. False

ANSWER: True

  1. Résumés are a summary record of your education, training, experience, and other qualifications. a. True b. False

ANSWER: True

  1. The primary function of a résumé is to provide a basis for screening applicants out of contention for a job. a. True b. False

ANSWER: True

  1. A résumé in a chronological format provides your information in reverse order, with the oldest experience first. a. True b. False

ANSWER: False

  1. A résumé in a chronological format would position the most recent of your previous three jobs at the end of the experience section of the document. a. True b. False

ANSWER: False

  1. The three résumé formats are: chronological format (information in reverse order with the most recent first), skills format (aptitudes and qualities), and functional format (career-related experiences). a. True b. False

ANSWER: True

  1. Specific abilities, such as using Microsoft Office, should be stated during an interview but not listed on your résumé. a. True b. False

ANSWER: False

  1. Your résumé should include an exhaustive list of functions and responsibilities that you had in each of your previous jobs. a. True b. False

ANSWER: False

  1. The most common mistake in a résumé is including your specific achievements from previous jobs. a. True b. False

ANSWER: False

  1. Posting your résumé on Monster.com and other Internet sites is all you need to do to get a good job. a. True b. False

ANSWER: False

  1. Employers can obtain your credit report and may use the information contained in the report to make an employment decision. About 10 states prohibit employers from using credit reports when hiring. a. True b. False

ANSWER: True

  1. Some employers may review a job applicants’ Facebook postings and credit reports when performing background checks. a. True b. False

ANSWER: True

34.Mostemploymentagenciesearntheirfeesfromthejobapplicant.