Why Is Theory Useful to the Personal Financial Planning Process

question 18

Multiple Choice

Why is theory useful to the personal financial planning process?

• A)With theory,we can attempt to explain why people do what they do.
• B)The assumptions required by theory are always realistic.
• C)Theory encapsulates all of reality.
• D)All of the above.
• E)None of the above.

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Definitions:

Payroll Tax

Taxes imposed on employers or employees, and are usually calculated as a percentage of the salaries that employers pay their staff.

Unemployment Rate

The proportion of the workforce that is unemployed and actively seeking work.

Corporations

Legal entities that are separate and distinct from their owners, created to conduct business, can enter into contracts, loan and borrow money, sue and be sued.

Normative Economic Statement

An opinion or value judgment about what ought to be, rather than what is measurable or empirically observable.