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Chapter 1 Test: Intro to Personal Finance Answer Key

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Key Terms
#1 All of the decisions and activities of an individual or family regarding their money, including spending, saving, budgeting, etc. What is Personal Finance?
#2 A fee paid by a borrower to the lender for the use of borrowed money; typically calculated as a percentage of the principle (original loan amount). What is Interest?
#3 The knowledge and skillset necessary to be an informed consumer and manage finances effectively. What is Financial Literacy?
#4 A person or organization that uses a product or service What is a Consumer?
#5 An obligation of repayment owed by one party (the borrower) to a second party (creditor/lender); in most cases this includes repayment of the original loan amount plus interest. What is Debt?
Key Components of Financial Planning
#1 Assess your _______ situation. What is Income?
#2 Set money _______! Make sure you have a mix of both short-term and long-term ______. What are Goals?
#3 You must write out a detailed ________ for accomplishing your goals. This begins with your budget. What is a Plan?
#4 Know your money _____________. What is Personality?
#5 Replace money _______ with money truths. What are myths?
Money, the American Way
#1 This was created in 1933 to restore public trust in banks and encourage stability in the financial system through the promotion of sound banking practices and insuring deposits of up to $250,000 per institution as long as the bank is a member. What is the Federal Deposit Insurance Corporation (FDIC)?
#2 Established in 1933, its purpose was to refinance home mortgages in default to prevent foreclosure. What is the Home Owners' Loan Corporation (HOLC)?
#3 U.S. government agency that insures loans made by banks and other private lenders for home building and home buying. It was created as part of the National Housing Act of 1934. What is the Federal Housing Authority (FHA)?
#4 As part of the Tennessee Valley Authority (TVA), this agency purchased inexpensive electrical appliances and then made them available to working people through installment loans with a typical repayment period of three to four years. In an attempt to reduce farm foreclosures, loans were made available to farmers under this agency. These loans were used to refinance farm mortgages or provide capital ($) for agricultural production. What is the Electric Home and Farm Authority (EHFA)?
#5 FHA What is Federal Housing Authority?
Today's American Reality
#1 You don't have to spend more _________ than you make just to look good in front of your friends. You can learn basic money principles and put them into practice. What is Money?
#2 When you manage money well, you will experience deeper _____________. What is Satisfaction?
#3 It's really simple! Personal finance is 80% _____________ and 20% head knowledge. What is Behavior?
#4 Money ______________ is easy--it's controlling your nehavior that's the real challenge. What is Math?
#5 As you think about the ' ______________ ' American family, remember that ' ________________' is broke. You don't have to be ' _____________'! What is Normal?
$$You and Money$$
#1 First, you need to be comfortable with _________ __________. What is Basic Math?
#2 Second, you must start learning the _________________ of money. What is Language?
#3 Third, and this is the hardest part, you need to learn how to manage your ________________ with money. What is Behavior?
#4 Knowing the ________________ of money allows you to tell your money what to do. What is Language?
#5 You'll be able to communicate effectively with _________, financial planners and insruance agents. What are Bankers?
Final Question
You should reserve use of a credit for these specific times. What is NEVER! Save to buy what you want!