Unit 2 finance math study guide
If a person earned $50,000 last year and again earns $50,000 this year, but the rate of inflation is 4%, this year's buying power when compared to last year's
is $48,000.
National economic trends
should impact individual financial planning.
The occupational Outlook Handbook is a good source for finding information about
the areas the will need more employees in the coming years
The purpose of the IRS is to
enforce tax laws and carry out the federal tax system.
Usually the least expensive way for a person to obtain health insurance is by
enrolling in an employer-provided health care plan
Which is a valid statement about a dependent?
for each dependent a person has, she is able to take a deduction from the amount of taxes she owes when filing her tax return
A person is collecting his pension and is very happy that his plan has a "cost of living" increase each year. This feature helps the person from feeling the full impact of
inflation
During a recession, it is noticeable that
people are buying less and there are higher levels of unemployment.
The purpose of life insurance is to
provide funds to help a person's beneficiaries maintain a certain standard of living should the policyholder die.
A person with insurance coverages ends up in the hospital with a broken wrist suffered while playing football with a group of friends. After an X-ray, MRI, doctor visit, orthopedist visit, and cast he leaves the hospital with a bill of $9,000. He has a $2,000 annual deductible and this is his first visit to a doctor in this calendar year. He also has a 20% co-pay. The amount that he is responsible for paying is
$3,400
A person decides that she needs braces to correct her teeth. Her orthodontist agrees and tell her that it will take about 18 months to correct her teeth completely and the work will cost $7,500. Her insurance company says that this is cosmetic work and therefore it is not covered by her plan. If she goes ahead with this dental work, she will have to pay
$7,500, the full amount
Which of the following statements is a true statement?
A certification is recognition that a person has acquired a certain level of knowledge or training in a particular area of study
Which decision illustrates the idea that a person's financial decisions are influenced by the overall economy?
A person switches the language she is studying in college from French to Spanish after she reads a newspaper article about how the population of the United States is changing.
What is a true statement about insurance?
As the cost of insurance has risen, more companies are cutting back on employee coverage or requiring employees to pay a larger share of the premiums.
Since it is true that a term life insurance policy expires at the end of the term and there are no accumulated savings, why would a single 38-year-old father of three children under the age of five decide to buy a 20-year term policy instead of a whole life policy?
Compared to whole life insurance, he can buy much more coverage for his children in case of his death for a relatively low price.
A 28-year old earns $54,000 from his job as an illustrator. He also earned another $23,000 doing work for private clients. In May of this year he got married. His wife, also an illustrator, earned $47,000. They bought a house in June, He always done his own taxes filing the 1040EZ and taking the standard deduction. What advice should he follow for the year?
Because of all the changes in his life, he should pay a tax professional to complete his taxes and figure out the most beneficial filing status and tax form for him to use.
As a first step in selecting a career path, a person should
Determine which career areas interest him or her
Rebecca and Eduardo have medical insurance through their employers; Rebecca's coverage is through an HMO and Eduardo's is through a PPO. Which of the following is a true statement about the probable difference in coverage each will receive?
Eduardo will probably have a larger provider network from which to choose doctors.
Which insurance term is not correctly matched with its description?
Family coverage: the policyholder pay a lower premium in order to obtain coverage for all members of the family as long as they live at home.
Which of the following statements about taxes and financial planning is true?
In most cases it is possible for people to reduce their tax liability by adjusting their financial plan
What is the business cycle?
It is a period of economic growth followed by a period in which the economy is shrinking.
A person is trying to decide between buying term life insurance and whole life insurance when someone suggests that he consider buying a universal life policy. What is an advantage of universal life that attracts many people to this financial product?
It is considered the most flexible type of life insurance because it combines the ability to accumulate savings and extend the policy's term.
Which of the following statements about adjusted gross income is true?
It is the amount used to determine what a person actually has to pay in taxes.
Which of the following is a true statement about the U.S. job market?
Jobs in health care occupations are expected to grow mare than most over the next several years.
Juanita and Jessica work at the same company. Each is married and earns $75,000 per year. Juanita is paying more in taxes than Jessica. What two factors can help to explain why this is true?
Juanita doe not have any children and does not itemize deductions; Jessica itemizes deductions and has three children
A person looks over his pay stop and sees that in addition to paying state and federal personal income taxes, he is paying other personal taxes such as Social Security and Medicare. He is inly 20, so he is the sure that his employer has made a mistake since Social Security and Medicare are for old people and the money should be returned to him. Is he right?
No. The money he is contributing to Social Security and Medicare is paying the benefits for today's older people.
A person had breast cancer while employed by a company. She was treated and has been cancer free for eight years. She has a wonderful offer for a top position at a new company but she is worried that she will not be able to get health insurance coverage. Should she worry?
No. Workers are protected by law from being denied insurance if they switch jobs even if they have a preexisting condition.
Even though preferred provider organizations (PPOs) usually charge a higher premium for insurance coverage than health maintenance organizations (HMOs), people are often willing to pay the difference because they know that the
PPO usually has a greater number of doctors from which the per-son can select a primary care doctor and specialists.
From the following, select the tax that is matched with its correct explanation:
Payroll tax: money deducted from a person's salary that is sent to the government by the employer
A career that requires a college degree and is expected to grow in employment in the coming years is
Register nurses
A person completes her federal 1040EZ form and sees that she paid total quarterly estimated taxes of $12,000. But the calculations show that she should have only paid $9,500 in taxes. What will happen is she sends the IRS this completed form with the necessary supporting documents?
She will receive a federal tax refund of $2,500
Which of the following is a true statement about inflation?
Some investments are able to grow at a rate greater than the rate of inflation; these investments, however, may carry greater risk.
Which statements about taxes is true?
Taxes are the major source of revenue for the government
Why do many employers say that a cover letter is as important as the resume that it accompanies?
The cover letter gives the writer a chance to explain why she believes that her skill and knowledge make her the ideal person for the position
A person submitted his claim for reimbursement of medical expenses to his insurance company and his claim was denied. Recently he switched insurance coverage. His former insurance company always paid for injections he received to calm down the arthritis in his knees. What is the most likely reason that the new insurance would not pay for his treatments?
The injections are not a covered procedure under his new insurance policy.
How do economists measure inflation?
They compare the costs of a standard group of goods and services bought today to how much those goods cost a year ago.
A person wins a $25,000 on a game show and a trip to Costa Rica worth $5,700. Does he have any tax obligation from these winnings?
Yes. All of these winnings become apart of his gross income.
A young, healthy single person without dependents decides that she is going to buy a whole life policy that is offered where she works. Since she is engaged and is hoping to have children within five years, she thinks that buying this insurance is a good move. Is this a wise finan-cial decision?
Yes. She is young and healthy and she will get a good rate on the insurance and will have it when her family may really need it.
A person finds out that a bachelor's degree he can expect to earn $55,000 a year as a financial researcher. If he spends two year getting an MBA, it will cost him $25,000 a year for his education however, he can then expect to earn a minimum of $90,000 a year as a financial analyst. If he decides to take the additional education route, to makeup for the financial cost of postponing his career it will take him
almost 5 years
A young athletic woman receives her monthly insurance premium notice. Her premium has increased to $350 a month. She decides to drop her insurance, reasoning that she can better spend her money on a gym membership and yoga classes to relieve the stress in her back. She decides that dropping this health insurance will also enable her to start saving money in an IRA. This is a
bad idea because one bad illness or even a small injury can wipe out all of her savings.
Because of globalization, an individual may have to decide whether to
buy a pair of jeans made in America at three times the cost of jeans made in China.
A person's resume should not include
current salary
In deciding whether to pursue additional education and training for a job, a person decides to do a cost/benefit analysis. This is a good idea because it will help her to
decide whether the benefits she believes she will have in a certain job and career are worth the financial and quality of life costs associated with gaining the necessary skills and education
The reason that a person buys health or life insurance is to
limit the amount of financial loss if there is an illness, injury, or loss of life.
As a result of globalization
more goods sold in America are produced in other parts of the world.
If a person is self-employed and earns $70,000 annually, the person
must pay estimated income taxes every quarter
Another name for take-home apy is
net pay
If the real gross domestic product (GDP) is going up, it is a sign that
the economy is gaining strength.
The demographic trend that helps explain why there has been an increase in demand for health care workers is
the graying of America.
If a college or university offers nationally accredited nursing program, it most likely means that
the program has been cited by a nationally recognized nursing professional organization as meeting certain standards
The best definition of economics is that it is the study of
unlimited wants versus limited resources.