Unit 3 Test Review Consumer Math

Which of the following is a type of deduction that employees can choose to have deducted from their pay?

• Social Security contributions

• State income tax withholdings

• Voluntary retirement savings

• Federal income tax withholdings

FICA deductions are _________.

• Mandatory and based on gross income

• Optional and based on net income

• Voluntary and based on gross pay

• Mandatory and based on net income

Which of the following statements about payroll deductions is true?

• FICA and federal taxes are voluntary deductions

• State and federal income taxes are fixed and optional deductions

• Deductions such as FICA and federal income tax are mandatory

• All deductions are discretionary and based on individual preferences

Which of these is a fixed expense, that does not change from month to month?

• Rent payment

• Grocery shopping

• Entertainment expenses

• Travel expenses

If you make $2,200 after deductions and your expenses total $2,800 for the month, what does this situation represent?

• Budget surplus

• Budget deficit

• Balanced budget

• Excess savings

What is it called when you make more money than you spend in a given period?

• Deficit

• Surplus

• Overage

• Excess

What does the concept of compound interest mean in finance?

• Interest accrues at a fixed rate

• Interest is calculated only on the initial amount

• Interest grows exponentially based on accumulated interest

• Interest does not accumulate until the end of the term

You work 35 hours a week for 51 weeks. Which option will result in the highest annual income?

• $40,000 per year

• $20 per hour

• $20 per hour plus a $2,000 annual bonus

• $40,000 per year plus a 5% annual bonus

Your gross pay is $1,500 and your net income is $1,100.

How much was deducted for FICA, assuming the FICA rate is 7.65%?

• $30.60

• $84.15

• $114.75

• $400.00

What is the difference in Gross Pay and Net Pay?

• Gross pay describes your pay after deductions; net pay is before.

• Gross and net pay are the same.

• Net pay describes your pay after deductions; gross pay is before.