SSPFL1: Income and Earnings

What is the primary reason income is considered a scarce resource?

• People have unlimited wants and needs but limited income

• Most people prefer not to work for income

• Income is only available to certain individuals

• The government controls all income distribution

How does education level typically relate to unemployment rates?

• No relationship exists between education and unemployment

• Higher education leads to higher unemployment

• Higher education generally leads to lower unemployment

• Education only affects employment in certain industries

Which type of income is characterized by fixed regular payments, regardless of hours worked, typically paid monthly or biweekly?

• Hourly wages

• Salary

• Tips

• Capital gains

What is disposable income?

• Money spent on luxury items

• Total income before any deductions

• Income remaining after taxes are deducted

• Money set aside for savings only

Which of the following is a mandatory payroll deduction?

• Health insurance premiums

• 401(k) contributions

• FICA taxes

• Union dues

What is the primary characteristic of independent contractor income?

• Guaranteed hourly wages

• Regular monthly salary

• Payment for specific agreed-upon services

• Profit from investment sales

Which statement best describes gross pay?

• The amount remaining after all deductions

• The total amount earned before any deductions

• The amount of taxes withheld

• The sum of all overtime payments

What percentage of income goes to Medicare under FICA?

• 6.2%

• 1.45%

• 7.65%

• 12.4%

When should you update your W-4 form?

• Only when starting a new job

• Every tax season

• When significant life changes occur

• Once every five years

What happens to your disposable income if your pay stays the same but taxes go up?

• It increases

• It stays the same

• It decreases

• It depends