. Which of the following is NOT a true statement regarding “Propensity to Consume”? Select one:
a. Your average propensity to consume is the percentage of each dollar of income, on the average, that is spent for current needs rather than savings.
b. Average propensity to consume is best described as how much of your money you plan to save in your financial plan.
c. A person making $35,000 and spending $30,800 has an average propensity to consume of 88%.
d. Generally, as income rises, the average propensity to consume decreases.
e. Two persons with equal average propensities to consume will not necessarily have equal standards of living because of differences in income.
2. The ratio that is calculated by dividing your total monthly loan payments by your monthly gross income is called the: Select one:
a. Debt Service Ratio
b. Solvency Ratio
c. Liquidity Ratio
d. Income Ratio
3. The term most closely associated with quality of life is: Select one:
a. Standard of Living
b. Money
c. Education
d. Wealth
e. Consumption
4. The following would represent qualitative data obtained by a planner during a data-gathering session: . . . (1) The primary and contingent beneficiaries of the client’s life insurance policies . . . (2) The amount and type of life insurance included in the client’s employee benefits package . . . (3) The age at which the client hopes to retire . . . (4) The client’s established gifting strategy to his grandchildren’s college fund over the next 10 years . . . (5) The fact that the client’s wife is expecting a significant inheritance within 10 years, which they feel will decrease their need to contribute currently to a retirement plan Select one:
a. (1), (3) and (5)
b. (2), (3) and (4)
c. (1), (2) and (4)
d. (3) and (5)
e. (3), (4) and (5)
5. Which of the following economic concepts is/are correctly represented? . . . (1) Income is a prime factor impacting demand within the economy. . . . (2) The Substitution Effect states that as the cost of goods rises, consumers reduce or cease consumption. . . . (3) Price is considered the most important factor affecting demand. . . . (4) Changes in Gross Domestic Product measure economic growth. . . . (5) Our federal deficit is the cumulative result of spending that exceeds revenue. Select one:
a. All of the 5 offered responses are correctly represented.
b. (1), (3) and (4)
c. None of the 5 offered responses are correctly represented.
d. (2) and (4) only
e. (2), (4) and (5)
6. The following would represent quantitative data obtained by a planner during a data-gathering session: . . . (1) The primary and contingent beneficiaries of the client’s life insurance policies . . . (2) The amount and type of life insurance included in the client’s employee benefits package . . . (3) The age at which the client hopes to retire . . . (4) The client’s established gifting strategy to his grandchildren’s college fund over the next 10 years . . . (5) The fact that the client’s wife is expecting a significant inheritance within 10 years, which they feel will decrease their need to contribute currently to a retirement plan Select one:
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