Question 1

Economists Novy-Marx and Rauh contend that if San Fransisco wanted to adequately fund its pension systems for its public workers it would have to put on

Accepted Answer

Novy-Marx and Rauh's analysis suggests that a significant one-time tax, such as nearly $35,000 per household, would be necessary to adequately fund San Francisco's pension systems.

Question 2

The core-theory relied upon most to answer questions with regard to unfunded liabilities is

Accepted Answer

Unfunded liabilities refer to future obligations that are not fully funded, meaning there will be a shortfall in the amount of funds available to fulfill those obligations. To determine the present value of these future obligations, present value theory is relied upon. Present value calculations involve discounting future cash flows to their present value to account for the time value of money. Therefore, the core theory relied upon to answer questions with regard to unfunded liabilities is present value theory.

Question 3

Economists Novy-Marx and Rauh contend that if New York wanted to adequately fund its pension systems for its public workers it would have to put on

Accepted Answer

Novy-Marx and Rauh's analysis suggests that a significant one-time tax of nearly $39,000 per household would be necessary to adequately fund New York's pension systems for public workers.

Question 4

Economists Novy-Marx and Rauh contend that if Boston wanted to adequately fund its pension systems for its public workers it would have to put on

Accepted Answer

According to the economists Novy-Marx and Rauh, Boston would need to impose a one-time tax of nearly $31,000 per household to adequately fund its pension systems for its public workers. This would be a significant amount and not a feasible option for most households.

Question 5

The dire predictions about the underfunded nature of Social Security, Medicare, and state and local pensions could be wrong because

Accepted Answer

The answer of The dire predictions about the underfunded nature...

Question 6

If GDP grows at 4.5% rather than 3.5%, over a 25 year period that would result in __ than anticipated.

Accepted Answer

To calculate the difference between the two growth rates over 25 years, we can use the formula:
A = P(1+r)^t
Where:
A= Final GDP
P= Initial GDP
r= Annual growth rate
t= Time period in years

For the first scenario (3.5% growth):
A = P(1+0.035)^25
A = P(2.34)
A/P = 2.34

For the second scenario (4.5% growth):
A = P(1+0.045)^25
A = P(3.11)
A/P = 3.11

The difference in GDP between the two scenarios is:
3.11/2.34 = 1.326, or 32.6% more GDP than anticipated.

However, the question asks for the result in comparison to the anticipated GDP growth rate of 3.5%. Therefore, the answer would be:
3.11/2.34 - 1 = 0.328, or 32.8% more GDP than anticipated.

The closest option is B, which states 28% more GDP. However, the correct answer is 32.8% more GDP.

Question 7

The dire predictions about the underfunded nature of Social Security, Medicare, and state and local pensions could be wrong because

Accepted Answer

If benefits are reduced from what is currently predicted, it would alleviate some of the underfunding problems. While interest rates, unemployment rates, and taxable incomes can all impact the funding of these programs, they are more uncertain and less straightforward solutions than reducing benefits.

Question 8

The dire predictions about the underfunded nature of Social Security, Medicare, and state and local pensions could be wrong because

Accepted Answer

Modest changes to the programs such as adjusting the retirement age, increasing tax revenue, or reducing benefits could improve the funding of Social Security, Medicare, and state and local pensions. Therefore, the dire predictions about their underfunded nature may not necessarily be accurate. While interest rates, unemployment rates, and taxable incomes may also affect the programs, the likelihood and direction of these changes are uncertain.

Question 9

Economists Novy-Marx and Rauh contend that if Chicago wanted to adequately fund its pension systems for its public workers it would have to put on

Accepted Answer

The article states that Novy-Marx and Rauh's research suggests that a one-time tax of nearly $42,000 per household would be needed to adequately fund Chicago's pension systems for its public workers.

Question 10

The core-theory relied upon most to answer questions with regard to unfunded liabilities is

Accepted Answer

The correct theory relied upon most to answer questions with regard to unfunded liabilities is present value. Present value is used to calculate the current value of future cash flows, which in this case refers to the current value of future payments that will be made to meet the unfunded liabilities. By using present value, policymakers can estimate the size of the unfunded liability and determine how much money needs to be set aside today to meet those obligations in the future. Unemployment and inflation are not directly related to unfunded liabilities, and while future value is related, it is not the most relevant theory for calculating unfunded liabilities.

Question 11

The dire predictions about the underfunded nature of Social Security, Medicare, and state and local pensions could be wrong because

Accepted Answer

The answer of The dire predictions about the underfunded nature...

Quiz 16: Is the Fiscalsky Falling: An Examination of Unfunded Social Security, Medicare, and State and Local Pension Liabilities

Economists Novy-Marx and Rauh contend that if San Fransisco wanted to adequately fund its pension systems for its public workers it would have to put on

The core-theory relied upon most to answer questions with regard to unfunded liabilities is

Economists Novy-Marx and Rauh contend that if New York wanted to adequately fund its pension systems for its public workers it would have to put on

Economists Novy-Marx and Rauh contend that if Boston wanted to adequately fund its pension systems for its public workers it would have to put on

The dire predictions about the underfunded nature of Social Security, Medicare, and state and local pensions could be wrong because

If GDP grows at 4.5% rather than 3.5%, over a 25 year period that would result in __ than anticipated.

The dire predictions about the underfunded nature of Social Security, Medicare, and state and local pensions could be wrong because

The dire predictions about the underfunded nature of Social Security, Medicare, and state and local pensions could be wrong because

Economists Novy-Marx and Rauh contend that if Chicago wanted to adequately fund its pension systems for its public workers it would have to put on

The core-theory relied upon most to answer questions with regard to unfunded liabilities is

The dire predictions about the underfunded nature of Social Security, Medicare, and state and local pensions could be wrong because