1. In 2018, the Bank of Canada raised the overnight rate to 1.75%. Explain how rising interest rates in Canada
would affect consumption.
2. Payroll taxes are 6.2%, and Medicare taxes are 2.9%. Your employer owes you $580.
(a) Approximately how much will you receive after these deductions?
(b) How much will your work cost your employer?
3. In your current job, you earn $92,000. You take the standard deduction of $12,200. You have an offer of a
new job working for a different employer. Your salary would go up by $10,000. Social Security taxes are
6.2%, and Medicare taxes are 2.9%. Assuming no state and local taxes, when federal income taxes and payroll
taxes are deducted, how much of the $10,000 do you get?
For taxable
... but not
... the marginal
income over...
over...
tax rate is:
$0
$9,700
10%
$9,700
$39,475
12%
$39,475
$84,200
22%
$84,200
$160,725
24%
$160,725
$204,100
32%
$204,100
$510,300
35%
$510,300
37%
