Economics Consumer Final Exam Review

Someone creating a budget to guide their spending must...

• determine their fixed expenses.

• decide how much to spend on variable expenses.

• subtract any payroll tax deductions from their gross pay.

• All of these must be done to construct a workable budget.

What is the difference between gross and net income?

• Gross income is before taxes, net is after taxes

• Net income is before taxes, gross is before taxes

• Gross and net taxes are the same thing

• Gross income is adjusted for inflation, net income isn’t.

Which of these costs would be the MOST difficult to adjust if you were looking to reduce your expenses in your budget?

• Dining out at local restaurants.

• Loan payments on a new car.

• Expenses for new clothes.

• Postponing a purchase for a new TV.

Assuming you filed your taxes correctly, the tax table lists a number that says $2,000.  Box 2 on your W-2 says $1,500 Federal income tax withheld.  According to this information:  

• you should owe $2000

• You should get a return of $2000

• You would essentially “break even”

• you owe the IRS $500.

Typically the higher the amount of allowances you claim on your W-4 form:

• the lower the amount of taxes you will have taken out of your paycheck.

• the higher the amount of taxes you will have taken out of your paycheck.

• the more likely you will be paid every week instead of every two weeks as a pay period.

• the more likely your net income will be higher than your gross income.

The tax form you receive in January from your employer that outlines your totals from the previous year in terms of income and taxes withheld is the...

• W4

• 1040

• W2

• There is no tax form for this

You are responsible for letting your company know how much to take out of your paycheck for withholding taxes by filling out:

• The 1040

• Form W-4

• Form W-2

Which of the following documents enables your employer to withhold the proper amount from your paycheck?

• Form 1099-INT

• Form 1040

• Form W-2

• Form W-4

1. Bobby McGee has $416.50 in his account and uses his debit card in the amounts of the purchases below:  

1. $89 to the Jewels

2. $142 to Wal-Mart

3. $184 to Best Buy

• $1.50

• $0.50

• -$0.50

• $0

• $414.50

When you are “reconciling” your checking account, you are comparing what two pieces of information?

• Your check register and saved receipts

• Your saved receipts and bills

• Your bank statement and checkbook register

• Your bank statement and saved receipts