« previous next »

Author Question: An IRA (Individual Retirement Account) allows taxpayers to invest money out of their personal income ... (Read 76 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?

Hyperthyroidism leads to an increased rate of metabolism and affects about 1% of women but only 0.1% of men. For most people, this increased metabolic rate causes the thyroid gland to become enlarged (known as a goiter).

Did you know?

The average office desk has 400 times more bacteria on it than a toilet.

Did you know?

Cocaine was isolated in 1860 and first used as a local anesthetic in 1884. Its first clinical use was by Sigmund Freud to wean a patient from morphine addiction. The fictional character Sherlock Holmes was supposed to be addicted to cocaine by injection.

Did you know?

Aspirin is the most widely used drug in the world. It has even been recognized as such by the Guinness Book of World Records.

Did you know?

Adult head lice are gray, about ? inch long, and often have a tiny dot on their backs. A female can lay between 50 and 150 eggs within the several weeks that she is alive. They feed on human blood.

A nearly motionless individual, alert to danger, will whistle when alarmed to warn other groundhogs A nearly motionless individual, alert to danger, will whistle when alarmed to warn other groundhogs
Booker T. Washington in his office at Tuskegee Institute, 1900. Washington chose a policy of accommo Booker T. Washington in his office at Tuskegee Institute, 1900. Washington chose a policy of accommo
Global Stratification: Income of the World's Nations Global Stratification: Income of the World's Nations
Percentage of higher-income Canadian households Percentage of higher-income Canadian households
Construct a Lorenz curve that shows income distribution in this society. Construct a Lorenz curve that shows income distribution in this society.
Time value money Time value money
Video: Chemical Synapse Animation

For a complete list of videos, visit our video library