Which of the Following Statements Describes How a Traditional 401(k)

question 57

Multiple Choice

Which of the following statements describes how a traditional 401(k) account is similar to a Roth 401(k) account?

• A) Employees contribute before-tax dollars to both types of accounts.
• B) Distributions from a traditional 401(k) account and a Roth 401(k) account are both subject to minimum distribution penalties.
• C) Both accounts can receive matching contributions from employers.
• D) Employers generally choose how funds in these accounts will be invested.

---

Definitions:

Purely Competitive Industry

A market structure where many firms sell identical products, and no single company can influence the market price due to competition.

Profit

The financial gain realized when the revenue gained from a business activity exceeds the costs, expenses, and taxes needed to sustain the activity.

Normal Profit

The minimum level of profit necessary for a firm to remain competitive in the market, essentially covering opportunity costs.

Equilibrium Price

The price at which the quantity of goods supplied equals the quantity of goods demanded in a market.