Which of the Following Statements Is Correct for an Individual

question 44

Multiple Choice

Which of the following statements is correct for an individual with a net income of $50,000, a tax liability of $10,704.50, and a 28 percent marginal tax rate?

• A)The average tax rate is 21.41 percent
• B)The average tax rate is 28.00 percent
• C)The average tax rate is unknown, but less than the marginal tax rate
• D)The average tax rate is unknown, but greater than the marginal tax rate

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Definitions:

Financial Intermediaries

Institutions that facilitate the channeling of funds between savers and borrowers, by ensuring the flow of capital.

Pension Funds

Investment pools, typically of large size, established to manage and invest the retirement funds of employees, offering them income upon retirement.

Credit Unions

Member-owned financial cooperatives that provide the same services as banks but are typically nonprofit, aiming to serve their members rather than maximize profit.

Agency Problem

A conflict of interest inherent in any relationship where one party is expected to act in the best interest of another.