Economics Test Part 2

________________ is the money you have left over to pay for nonessentials and emergencies or to put into savings.

Discretionary Income

Discretionary income is the same thing as __________ income.

Disposable

T/F A W4 form determines the amount of Social Security tax that is deducted from a worker's pay.

False

T/F A social security number does not need to be entered on a W-4

False

T/F Sales tax does not support state services.

False

T/F The federal government pays interest on the money you receive in a tax refund.

False

T/F When thinking about opportunity costs, we only consider money (or the impact it has on our wallet/purse)

False

With a _______________ tax, people who make more money are required to pay higher taxes.

Federal Income

How do you do the rule of 72?

Find the number of years required to double your money at a given interest rate, you just divide the interest rate into 72.

You can calculate discretionary income by subtracting _____________.

Necessary expenses from income.

When making a decision, you decide that the expected benefits of your choice outweigh the expected benefits of all other options. This describes the _________________ of your decision.

Trade-offs

T/F Discretionary income may be used to pay for short-term financial goals.

True

T/F Employees need to fill out a new W-4 for each employer.

True

T/F Net income is typically less than gross income.

True

If you attend a small, private college you will likely have smaller class sizes but pay a higher tuition. This is an example of...

A trade off

What does IRA stand for?

Individual Retirement Account.

What federal agency issues the W-4 form?

Internal Revenue Service (IRS)