A Review of the 2019 Tax File of Gregory,a Single

question 1

Multiple Choice

A review of the 2019 tax file of Gregory,a single taxpayer who is age 40,provides the following information regarding Gregory's 2019 tax status: $$\begin{array} { | l | r | } \hline \text { Adjusted gross income } & \$ 40,000 \\\hline \text { Medical expenses (before percentage limit) } & 5,000 \\\hline \text { Itemized deductions other than medical } & 12,000 \\\hline 2019 \text { potential standard deduction } & 12,200 \\\hline\end{array}$$ In 2020,Gregory receives a reimbursement for last year's medical expenses of $1,200.As a result,Gregory must

• A)include $800 in gross income for 2020.
• B)include $1,200 in gross income for 2020.
• C)reduce 2020's medical expenses by $1,200.
• D)amend the 2019 return.

---

Definitions:

Equilibrium

An equilibrium state in the market where supply meets demand, stabilizing prices as a consequence.

Aggregate Supply

Aggregate supply constitutes the total supply of goods and services produced within an economy at a given overall price level in a specified time period.

Aggregate Demand

Refers to the total demand for goods and services within an economy at a given overall price level and in a given time period.

Full Employment Level

A situation in which all available labor resources are being used in the most economically efficient way, essentially meaning that unemployment is at the lowest possible level without causing inflation.