Social Security system is a pay as you go retirement
plan. Money taken from workers checks is
transferred to retirees. At one time there were 42 workers per
retiree; today the ratio is now under 3 to 1.
By 2030, the ratio is expected to fall to 2 to 1. The only way to
keep the current system solvent is to raise
taxes on those currently working or cut benefits to those already
retired. Neither of these options is
particularly...
How the pay as you go social security system increase or may not
increase the social welfare and how the fully funded social
security system increase or may not increase the social
welfare
Suppose a pay-as-you-go social security system where social
security is funded by a lump sum tax (t1) on the young
and on the old. Retirement benefits are given out as a fixed amount
b to each old consumer. Can social security work to
improve welfare for everyone under these conditions? Use
diagrams.
what do economics mean when they say social security and
medicare are pay as you go plans?What are these trust funds?and how
long will they have money left in them?What is the key long -run
problem for both social security and medicare?
a) How do the pay-as-you-go and
fully funded social security systems affect the equilibrium in the
model with interrupted generations?
b) In the Fisher
two-period model, if the consumer is a saver, consumption in
periods one and two are normal goods, and the income effect of an
increase in interest rate is greater than the substitution effect,
then saving:
A) will
increase.
will decrease.
will not change.
may either increase or decrease.
Why do you think that people are willing to accept currencies
such as Bitcoin that have no government backing? Do you think these
have a chance at becoming mainstream currencies with real influence
on foreign exchange rates?
How is Social Security different from a private defined benefit
plan? When and why is Social Security projected to become
insolvent? What are some possible solutions to the problem? Why are
these solutions difficult to implement?
How much would you be willing to pay for an investment that will
pay you and your heirs $16,000 each year in perpetuity if the first
payment is to be received in 9 years?
a) Assuming your opportunity cost is 6%?
b) if you want the payments to grow by 2% indefinitely.
problem must be in excel
Suppose there are two types of households in the economy:
workers and retirees. Workers pay social security tax at rate τb on
their labor incomes, revenues from which are distributed to retired
people as retirement income. For simplicity, this is the only
source income of retired people who are living hand to mouth (that
is, they don’t save). The government decided to improve the lives
of retired people by increasing the social security tax at time t∗
permanently. Write first-order...