Consumption and Benefits Unit Test
1 of 151 of 15 Items
Question
If an individual makes $4,000 in salary per month and has a side job making $20 per hour for 10 hours a week for 4 weeks in a month, and they receive $1,000 per month in rent from a roommate, what is their gross income?(1 point)
Responses
$4,000
$4,000
$4,800
$4,800
$5,800
$5,800
Cannot be determined, because taxes and deductions are not provided
The correct answer is:
$4,000 + ($20/hour x 10 hours/week x 4 weeks/month) + $1,000 = $4,000 + $800 + $1,000 = $5,800
What is a true statement about a 401k deduction?(1 point)
Responses
It is a contribution to the workers retirement account
It is a contribution to the workers retirement account
It is subtracted from the gross income resulting in lower taxes
It is subtracted from the gross income resulting in lower taxes
It is a mandatory deduction
It is a mandatory deduction
It is an involuntary deduction
It is an involuntary deduction
A and B
The correct answer is: A and B.
What is defined as a “take-home pay”?(1 point)
Responses
Paystub
Paystub
Net income
Net income
Salary
Salary
Wages
The correct answer is: Net income.
Which is true of a flexible spending account but not a health savings account?(1 point)
Responses
If you change jobs, you keep the account and all the money in it.
If you change jobs, you keep the account and all the money in it.
You can use it to pay for doctor visits.
You can use it to pay for doctor visits.
You can get one only if you have a health insurance plan with a high deductible.
You can get one only if you have a health insurance plan with a high deductible.
If you don’t spend it within a certain period of time, part or all of it reverts to your employer.
The correct answer is: If you don’t spend it within a certain period of time, part or all of it reverts to your employer.
Which is true of a health savings account but not a flexible spending account?(1 point)
Responses
You can use it to pay for prescription medicines.
You can use it to pay for prescription medicines.
You can use it to pay for over-the-counter medicines.
You can use it to pay for over-the-counter medicines.
You must spend the money in it within a certain period of time.
You must spend the money in it within a certain period of time.
You can get the account only if you have a health insurance plan with a high deductible.
The correct answer is: You can use it to pay for prescription medicines.
Which of the following is true of Social Security but not Medicare?(1 point)
Responses
Money withheld from your paycheck is used to pay benefits to people who are collecting them now.
Money withheld from your paycheck is used to pay benefits to people who are collecting them now.
Participation in the program is mandatory.
Participation in the program is mandatory.
It provides benefits to people with disabilities.
It provides benefits to people with disabilities.
It pays benefits to retirees.
The correct answer is: It provides benefits to people with disabilities.
What is defined as net pay?(1 point)
Responses
It is the total amount of money a worker earns in a given pay period.
It is the total amount of money a worker earns in a given pay period.
It is the money that is subtracted from gross pay to pay for benefits.
It is the money that is subtracted from gross pay to pay for benefits.
It is the money that is withheld from gross pay to pay taxes.
It is the money that is withheld from gross pay to pay taxes.
It is the money left over after deductions are removed and taxes are withheld from gross pay.
It is the money left over after deductions are removed and taxes are withheld from gross pay.
The correct answer is: It is the money left over after deductions are removed and taxes are withheld from gross pay.
Which of the following is an advantage of buying your car over leasing?(1 point)
Responses
When you want to get a new car, you have to deal with selling your current one.
When you want to get a new car, you have to deal with selling your current one.
The down payment for a car loan is usually smaller than the security deposit for a lease.
The down payment for a car loan is usually smaller than the security deposit for a lease.
You are always driving a new car.
You are always driving a new car.
You will end up owning the car, which may be worth a fair amount of money.
The correct answer is: You will end up owning the car, which may be worth a fair amount of money.
Which of the following is an advantage of buying your home over renting?
(1 point)
Responses
You do not have to worry about the housing market in your area.
You do not have to worry about the housing market in your area.
The amount you pay each month is set by the terms of your mortgage.
The amount you pay each month is set by the terms of your mortgage.
If something breaks, you have to fix it or pay to have it fixed.
If something breaks, you have to fix it or pay to have it fixed.
Your mortgage payments will far exceed the value of your home.
Your mortgage payments will far exceed the value of your home.
The correct answer is: The amount you pay each month is set by the terms of your mortgage.
What is the main reason to avoid renting to own?
(1 point)
Responses
If the item breaks, you have to buy a new one.
If the item breaks, you have to buy a new one.
You are buying used merchandise.
You are buying used merchandise.
It can be weeks before the item is delivered.
It can be weeks before the item is delivered.
You will pay much more than the cost of the item in a short period of time.
The correct answer is: You will pay much more than the cost of the item in a short period of time.
Which of the following is true of credit cards?
(1 point)
Responses
You cannot use them to buy something that costs more money that you have in the bank.
You cannot use them to buy something that costs more money that you have in the bank.
They generally charge 3% to 5% interest.
They generally charge 3% to 5% interest.
When you use them, you never really know how much you owe.
When you use them, you never really know how much you owe.
They can be used to make online purchases
The correct answer is: They can be used to make online purchases.
What is the difference between gross income and net income? Select the best answer.(1 point)
Responses
Gross income is the total of annual salary minus federal income tax.
Gross income is the total of annual salary minus federal income tax.
All wages and other earnings minus mandatory deductions
All wages and other earnings minus mandatory deductions
Net income is wages, salaries and other earnings minus all tax and deductions
Net income is wages, salaries and other earnings minus all tax and deductions
Wages minus voluntary deductions
The correct answer is: Net income is wages, salaries and other earnings minus all tax and deductions.
Which of the following is a benefit that an employer might offer?(1 point)
Responses
life insurance
life insurance
“Take Your Child to Work” Day
“Take Your Child to Work” Day
a flexible spending account
a flexible spending account
supportive workplace
supportive workplace
free lunch from local deli on Fridays
The correct answer is: life insurance, “Take Your Child to Work” Day, a flexible spending account, supportive workplace.
Why would someone choose to have extra money withheld from his paycheck for federal taxes?(1 point)
Responses
A person lives in a state with high income taxes and wants to make sure enough taxes are withheld.
A person lives in a state with high income taxes and wants to make sure enough taxes are withheld.
This person considers himself a patriot and wants to pay more taxes.
This person considers himself a patriot and wants to pay more taxes.
This person chose an insurance plan with a high deductible.
This person chose an insurance plan with a high deductible.
This person did not want to risk having too little money withheld and facing a penalty when filing their tax return.
The correct answer is: This person did not want to risk having too little money withheld and facing a penalty when filing their tax return.
Which of the following is true of store credit cards?
(1 point)
Responses
They are co-branded with Visa, MasterCard, or American Express.
They are co-branded with Visa, MasterCard, or American Express.
You can use them anywhere.
You can use them anywhere.
Most give you 28 days before they start to accrue interest.
Most give you 28 days before they start to accrue interest.
They usually have interest rates of 5 to 10 percentage points higher than those of ordinary credit cards.