« previous next »

Author Question: An IRA (Individual Retirement Account) allows taxpayers to invest money out of their personal income ... (Read 87 times)

123654777

  • Hero Member
  • *****
  • Posts: 585
on: Jun 29, 2018
An IRA (Individual Retirement Account) allows taxpayers to invest money out of their personal income before taxes.
 
  Financial advisors will often tell their clients that they will realize more net pay (income after taxes) if they invest with an IRA versus saving their money in a simple savings account at a bank. Explain how this is so.

Question 2

Buyers rush to purchase stocks in California vineyards following a forecast of a 30 percent decline in this year's grape harvest. What happens in the California wine market as a result of this announcement?
 
  A) The demand curve for California wine shifts to the right in anticipation of higher prices in the future.
  B) The demand curve for California wine shifts to the left in anticipation of higher prices in the future.
  C) The supply curve for California wine shifts to the left in anticipation of lower quantities in the future.
  D) The supply curve for California wine shifts to the right in anticipation of higher prices in the future.
InMicro ¦ Hubbard, O'Brien ¦ 1st Edition
Buy Test-Bank


sierrahalpin

  • Sr. Member
  • ****
  • Posts: 329
Reply #1 on: Jun 29, 2018
Answer to Question 1

Suppose that you are in the 28 tax bracket. If you save 1000 per year in a savings account without tax protection you will see a 1000 drop in your net income. However, if you save 1000 through an IRA you will only experience a 720 drop in your net income. The reason for this is that the 1000 is not subject to taxation. Normally 28 of this 1000 of income would be withheld (280).

Answer to Question 2

A


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
« previous next »
 

Did you know?

Though the United States has largely rejected the metric system, it is used for currency, as in 100 pennies = 1 dollar. Previously, the British currency system was used, with measurements such as 12 pence to the shilling, and 20 shillings to the pound.

Did you know?

Your chance of developing a kidney stone is 1 in 10. In recent years, approximately 3.7 million people in the United States were diagnosed with a kidney disease.

Did you know?

To combat osteoporosis, changes in lifestyle and diet are recommended. At-risk patients should include 1,200 to 1,500 mg of calcium daily either via dietary means or with supplements.

Did you know?

A recent study has found that following a diet rich in berries may slow down the aging process of the brain. This diet apparently helps to keep dopamine levels much higher than are seen in normal individuals who do not eat berries as a regular part of their diet as they enter their later years.

Did you know?

Stroke kills people from all ethnic backgrounds, but the people at highest risk for fatal strokes are: black men, black women, Asian men, white men, and white women.

Achondroplasia. The individual in this photograph has the reduced limb development that typifies thi Achondroplasia. The individual in this photograph has the reduced limb development that typifies thi
The risk of dying before the age of 65 gets lower as family income gets higher. The risk of dying before the age of 65 gets lower as family income gets higher.
Streptococci: Individual bacteria that have a rounded shape and have clumped together to form a ... Streptococci: Individual bacteria that have a rounded shape and have clumped together to form a ...
Maslow’s hierarchy of needs proposes that lower needs dominate the individual’s motivations and ... Maslow’s hierarchy of needs proposes that lower needs dominate the individual’s motivations and ...
Buildings account for 15% of greenhouse gas emissions Buildings account for 15% of greenhouse gas emissions
The chromosome locations for BRCA1 and BRCA2. Together, these genes account for the majority of case The chromosome locations for BRCA1 and BRCA2. Together, these genes account for the majority of case
Video: Protein catabolism - deamination

For a complete list of videos, visit our video library