Author Question: An IRA (Individual Retirement Account) allows taxpayers to invest money out of their personal income ... (Read 78 times)

123654777

  • Hero Member
  • *****
  • Posts: 585
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.


sierrahalpin

  • Sr. Member
  • ****
  • Posts: 329
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
 

Did you know?

Allergies play a major part in the health of children. The most prevalent childhood allergies are milk, egg, soy, wheat, peanuts, tree nuts, and seafood.

Did you know?

Only one in 10 cancer deaths is caused by the primary tumor. The vast majority of cancer mortality is caused by cells breaking away from the main tumor and metastasizing to other parts of the body, such as the brain, bones, or liver.

Did you know?

There are immediate benefits of chiropractic adjustments that are visible via magnetic resonance imaging (MRI). It shows that spinal manipulation therapy is effective in decreasing pain and increasing the gaps between the vertebrae, reducing pressure that leads to pain.

Did you know?

In 1844, Charles Goodyear obtained the first patent for a rubber condom.

Did you know?

To prove that stomach ulcers were caused by bacteria and not by stress, a researcher consumed an entire laboratory beaker full of bacterial culture. After this, he did indeed develop stomach ulcers, and won the Nobel Prize for his discovery.

For a complete list of videos, visit our video library