Many in Congress expect that future Social Security tax collections will fall short of the sum that will be needed to cover promised benefits. How can it cover this shortfall, and what are the problems associated with these solutions?
It can raise the Social Security tax by the amount necessary to meet the promised benefits. It can reduce
benefits, either overtly or by increasing the number of years of earnings used to determine benefits. These
options are politically unpopular, and have very little support. Congress can change the law to allow the
Social Security system to invest some of the trust funds in the private sector where the rates of return on
investment are higher than the rates currently earned by the fund's investment in long-term government
funds. Private investments are riskier, however, because they are not backed by the government.
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The crowding out of consumer spending by an increase in taxes will be the greatest when
A) consumers would have spent the entire amount they now must pay in taxes. B) consumers would have saved the entire amount they now must pay in taxes. C) consumers would have spent only a fraction of the amount they now must pay in taxes. D) the government has a history of increasing taxes on a regular basis.
"Moving along the AS curve, the real wage rate is constant while moving along the potential GDP line, the real wage rate changes." Explain whether the previous statement is correct or incorrect
What will be an ideal response?
The figure above provides information about Light-U-Up Utilities, which is a natural monopoly that provides electricity. If Light-U-Up is regulated, what is its economic profit if it must follow a marginal cost pricing rule?
A) -$40 B) -$20 C) $0 D) $30
Which of the following changes in the price index produces the greatest rate of inflation: 100 to 110, 150 to 165, or 180 to 198?
a. 100 to 110 b. 150 to 165 c. 180 to 198 d. All of these changes produce the same rate of inflation.