Quiz week 13 Social security

Which of the following reforms helps to solve the solvency problem of the US social security program? Increase the benefits of the retired from time to time. Switch to a fully-funded program. Increase payroll tax and normal retirement age. Privatize the social security by setting up individual accounts.

Increase payroll tax and normal retirement age.

A tax increase without a spending increase will cause households to which of the following? Save less and consume the same amount. Save the same amount and consume less. Consume more and save less. Consume less and save less as well

Save less and consume the same amount.

tax cut financed by public debt will induce households to do which of the following? Save more and consume the same amount. Consume more and save more as well. Save less and consume more. Consume more and save the same amount.

Save more and consume the same amount.

Which of the following is correct description of the social security in the US? The US social security is a fully-funded program, where payroll tax from current workers are used to pay for benefits of current retirees. The US social security is a pay-as-you-go program, where payroll tax from current workers is used to pay for benefits of current retirees. The US social security is a pay-as-you-go program, where a worker's payroll tax is used to pay for his own benefits when he retires in the future. The US social security is a fully-funded program, where a worker's payroll tax is used to pay for his own benefits when he retires in the future.

The US social security is a pay-as-you-go program, where payroll tax from current workers is used to pay for benefits of current retirees.

Why does the US social security program run into solvency problem? The promised return on forced saving is higher than budget balance return. The promised return of forced saving is lower than budget balance return. Compared with previous generations, social security promises too much to baby-boomers. Social security trust funds is not well managed.

The promised return on forced saving is higher than budget balance return.

Which of the following is not a correct description of the US social security program? It is a forced saving program. It intends to redistribute income from rich households to poor households. The return on the forced saving is determined by the stock market returns. It provides insurance against risk of unexpected long life.

The return on the forced saving is determined by the stock market returns.

Which of the following is not a correct description of a pay-as-you-go social security program? To balance the budget in pay-as-you-go, the return on forced saving must equal the real interest rate. Current workers' payroll tax is used to pay for benefits of current retirees. To balance the budget in pay-as-you-go, the return on forced saving (hence benefits) must be adjusted to reflect the demographic changes and economic growth. It is a forced saving program.

To balance the budget in pay-as-you-go, the return on forced saving must equal the real interest rate.

All of the following reforms help to deal with the solvency problem of the US social security program, except not indexing benefits by inflation. increasing the payroll tax rate. privatizing the social security by setting up individual accounts. increasing the normal retirement age.

privatizing the social security by setting up individual accounts

In a fully-funded social security program the young are forced to save for their own retirement. the young are forced to save for the retirement of the old. the young have to buy bonds for the old. the young pay for the benefits of the old.

the young are forced to save for their own retirement.

From individual households point of view, they are indifferent between a pay-as-you-go and a fully funded program. they always prefer a pay-as-you-go program to a fully-funded program. they prefer a social security program that gives them a higher personal return on their forced saving. they always prefer a fully-funded program to a pay-as-you-go program.

they prefer a social security program that gives them a higher personal return on their forced saving.