What Do These Financial Planning Terms Mean?

Match the terms relating to the basic terminology and concepts associated with the process, techniques of personal financial planning, and the environment in which it is conducted on the left with the descriptions of the terms on the right. Read each description carefully and select the letter of the description in the Answer column next to the correct term. These are not necessarily complete definitions, but there is only one possible answer for each term.

Term

Answer

Description

Standard of Living A$.$ The pattern of economic activity generally depicted as an undulating wave of expansion, peak, contraction, and trough.

Business Cycle B$.$ The act of giving up one thing for another.

Interest C$.$ The price of borrowed money.

Inflation D$.$ The term used to describe the tax rate applied to the last dollar of income earned.

Marginal Tax Rate E$.$ An increase in general price levels across economic sectors$.$

Time Value of Money F$.$ A professional who evaluates the comprehensive personal finances of an individual or a family and recommends strategies to set and achieve their long$-$term financial goals.

Opportunity Cost G$.$ The material well$-$being and peace of mind that individuals and groups desire and seek to attain, to maintain if attained, to preserve if threatened, and to regain if lost.

Trade$-$off H$.$ Employment compensation received in a form other than wages, salaries, commissions, or other cash payments.

Financial Planner I. The value of the next best alternative given up in a trade$-$off.

Employee Benefit J$.$ The general method used to compare the value of cash flows occurring across time$$by either calculating the future value of cash flows available today or determining today$$s value of cash flows occurring in the future.