3
QuizMultiple Choice

Relating Income and Careers — Test

Question 3 • Personal Finance

Two students invest the same amount for college. One uses a tax-advantaged account. Why will that student likely have more money?

Answer
A
earnings grow without yearly taxes
B
higher deposits
C
lower tuition
D
reduced investment risk

Explanation

A tax-advantaged account can let investment earnings grow without being taxed each year. That leaves more money invested to earn additional returns over time. The students deposit the same amount, so higher deposits do not explain the difference; tuition and investment risk are not necessarily changed by the account.

AI-written and checked against the verified answer.

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