Why Is It Important to Understand How Taxes Impact Your

question 32

Multiple Choice

Why is it important to understand how taxes impact your personal financial planning?

• A) Taxes paid reduce your net income and cash flow available to save as well as the returns on your investments.
• B) Not paying taxes can result in penalties and jail time.
• C) It is not that important since savings are not taxable.
• D) It is only important if you are in a 25%+ tax bracket.

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Definitions:

Demand Schedule

A table that shows the quantity of a good that consumers are willing to purchase at different prices.

Total Revenues

The total amount of income generated by the sale of goods or services before any expenses are subtracted.

Perfectly Inelastic

A market demand situation where the quantity demanded remains constant regardless of changes in price.

Quantity Supplied

The amount of a commodity that is made available for sale by producers at a certain price level, over a given period.