When making a financial decision what should be left out of the process whenever possible?
Explanation: Everyone knows that when it comes to making financial decisions, emotions should be set aside and reason based. However, few can actually do this. To make the right financial decision, choose times where your emotions are under control.
What is the final step in personal finance?
The final step in personal financial planning is to keep a constant assessment of your current financial condition. Explanation: Financial planning is a management tool applied to your receipts and expenses.
What is true about personal financial planning?
The correct answer is : c. Your financial goals will change over time. Personal financial planning is different for each individual. This planning involves savings, investments, expenses , etc.
What are the four situational influences for financial decisions?
Personal circumstances that influence financial thinking include family structure, health, career choice, and age. Family structure and health affect income needs and risk tolerance. Career choice affects income and wealth or asset accumulation.
Why is it important to know what influences your financial decision making?
Basically, it is about trying to better understand why people make certain choices and in turn what can be done to improve those choices. So the more a consumer understands the basis of their financial decision-making, the more they can adjust their lifestyle choices toward a more healthy financial future.
What are 2 economic factors that affect financial decisions?
Two central variables affecting financial and business decisions are the macroeconomic climate and efficiency concerns under competition.
What factors influence your financial future?
Key Takeaways
- Personal circumstances that influence financial thinking include family structure, health, career choice, and age.
- Family structure and health affect income needs and risk tolerance.
- Career choice affects income and wealth or asset accumulation.
What are the 3 important economic conditions?
Key Takeaways Economic conditions refer to the state of macroeconomic variables and trends in a country at a point in time. Such conditions may include GDP growth potential, the unemployment rate, inflation, and fiscal and monetary policy orientations.
How do economic conditions affect financial decisions?
“Some economic indicators like inflation and exchange rate impact an individual’s finances directly while others like GDP growth rate give an idea of where the economy is headed. Therefore, it is important to keep a close eye on the developments in this space. Also, all these events cannot be seen in isolation.
What is the importance of knowing economic issue?
Economic literacy also gives people the tools for understanding their economic world and how to interpret events that will either directly or indirectly affect them. Nations benefit from having an economically literate population because it improves the public’s ability to comprehend and evaluate critical issues.
Which factors contribute to the economic problems in a country?
Factors that Influence the Economic Development of a Country
- 1) Capital Formation:
- 2) Natural Resources:
- 3) Marketable Surplus of Agriculture:
- 4) Conditions in Foreign Trade:
- 5) Economic System:
- 1) Human Resources:
- 2) Technical Know-How and General Education:
- 3) Political Freedom:
What are the opportunity costs associated with financial decisions?
Opportunity cost associated with financial decisions are Personal Opportunity Costs and Financial Opportunity Costs. 2. Time value of money is the increase of an amount of money due to the earned interest or dividends. 3.
What is the relationship of opportunity cost in decision making?
“Opportunity cost is the cost of a foregone alternative. If you chose one alternative over another, then the cost of choosing that alternative is an opportunity cost. Opportunity cost is the benefits you lose by choosing one alternative over another one.”
What is the rule for using opportunity cost to make decisions?
The opportunity cost is the value of the next best alternative foregone. Every decision necessarily means giving up other options, which all have a value. The opportunity cost is the value one could have derived from using the same resources another way, though this is not always easily quantifiable.
Why do all economic decisions involve trade offs?
Every decision involves trade-offs because every choice you want results in picking it over something else. Opportunity cost means choosing the better one of two ideas. There will always be an alternative; what could have happened instead. Describe how people make decisions by thinking at the margin.
How Scarcity affects choices and decision-making?
The ability to make decisions comes with a limited capacity. The scarcity state depletes this finite capacity of decision-making. The scarcity of money affects the decision to spend that money on the urgent needs while ignoring the other important things which comes with a burden of future cost.
What 3 major decisions about production must be made to allocate resources effectively?
The state controls the society’s capital (means of production) and decides how resources should be allocated (including what should be produced, how prices should be set, and how much people should be paid for their work).
What is the most efficient way to allocate resources?
Allocative efficiency represents the most efficient allocation of scarce resources for an economy in the sense that, for any combination of scarce resources, the production of goods and services that occurs is most valued by society.