Reference no: EM133501102

Problem

I. According to the chapter, (i) a budget is a plan for managing money (ii) not every family needs a budget (iii) budgets are very complicated (iv) everyone could use the same standard budget.

II. Budgets are valuable for (i) rich families only (ii) middle-income families only (iii) poor families only (iv) all families.

III. As a first step in financial planning, one should (i) define those personal goals that will cost money (ii) borrow enough money to pay all the expenses you are likely to incur (iii) track your income and expenses for one month and then use the results to prepare a budget (i) shop wisely and use credit wisely.

IV. Budgets should be (i) followed very strictly (ii) flexible (iii) unchanging (iv) complicated.

V. Putting first things first in a budget means that (i) your needs and wants are equally important (ii) whatever comes to your mind first is usually the most important thing (iii) even the smallest expenses are included (iv) you must first plan obtaining money and spending for those things that are most important to you.

VI. Which one of the following items is classified as a fixed expense in a typical student's budget during the school year? (i) saving for a car (ii) snacks (iii) dating expenses (iv) car fare to school.

VII. Which one of the following items is part of estimated income? (i) savings (ii) school supplies (iii) earnings (i) lunches.

VIII. Wise money management (i) helps you to make the most of the money that you have (ii) reduces the need for bank accounts (iii) makes saving unnecessary (iv) results in an increase in your al- lowance or wages.

IX. The price tag on both the West Coast and the Hippity Hop CDs was $14. Although Lonnie would have loved to buy both, they were too expensive. After much thought, Lonnie purchased the Hippity Hop recording. What was the opportunity cost of Lonnie's decision? (i) $14 (ii) the West Coast CD (iii) $28 (d) the Hippity Hop CD.