Financial Algebra Unit 1 Exam Review

The graph shows a hypothetical tax rate as a function of income. Which equation matches the graph?

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Every pay period, Tamara pays 11% of her gross pay in taxes and an additional $200 in voluntary retirement deductions. Write an equation that represents Tamara’s net pay, where x represents her gross pay per pay period.

• f(x) = 0.11x + 200

• f(x) = 0.11x - 200

• f(x) = 0.89x + 200

• f(x) = 0.89x - 200

Given that f(x) = -4x + 7, which of the following ordered pairs represents f(2)?

• (2, -1)

• (2, 6.5)

• (2, -1.25)

• (2, 1)

Jorge made $85,000 last year as a junior consultant for a prestigious law firm placing him in the 22% tax bracket. What is true about Jorge’s marginal and effective tax brackets?

• His marginal tax bracket is 22%, and his effective tax bracket is less than 22%

• His marginal tax bracket is less than 22%, and his effective tax bracket is 22%

• His marginal tax bracket and his effective tax bracket are both less than 22%

• His marginal tax bracket and his effective tax bracket are both 22%

What statement is true about standard and itemized personal deductions?

• The standard deduction is always more than itemized personal deductions

• Itemized personal deductions are always more than the standard deduction

• You can take either the standard or itemized personal deductions, but not both

• The standard deduction is refundable but itemized personal deductions are not

The graph shows a hypothetical tax rate as a function of income. Which of the following statements about the graph is true?

• The tax is progressive

• The tax is regressive

• The tax is proportional

• The tax collects the same dollar amount from all earners

Which of the following is true about state taxes?

• The federal government determines state tax rates

• States can levy property taxes and sales taxes, but not income taxes

• Sales tax rates are the same in all states, but income tax rates are different

• The largest state programs funded by state taxes are education and healthcare

Which statement best describes the difference between being paid a wage versus being paid a salary?

• A wage is paid based on how many hours you work, while a salary is a fixed amount paid regardless of the number of hours

• A wage is paid every two weeks, while a salary is paid monthly

• A wage is paid to part-time employees, while a salary is paid to full-time employees

Lamar made $92,000 as a data analyst his first year out of college. He calculated his above-the-line deductions (such as retirement accounts) to be $5,500, his itemized deductions to be $7,000, and the standard deduction is $12,950. What deductions is Lamar allowed to take that will minimize his taxes owed?

• He can take all three for $25,450 in deductions

• He can take the $7,000 and the $12,950 for $19,950 in deductions

• He can take the $5,500 and the $7,000 for $12,500 in deductions

• He can take the $5,500 and the $12,950 for $18,450 in deductions

Kiki receives a paycheck for 15 hours of work at a rate of $20 per hour. Her paystub lists 401(k) withholdings of $40, FICA of $20, federal income taxes of $26, and a healthcare payment of $8. What is Kiki’s net pay?

• $206

• $254

• $300

• $394