If households ignore effects on future generations, a pay as you go social security system:
A)reduces current national savings.
B)raises investment.
C)raises the future capital stock.
D)all of the above.

Question

Quizplus · Accepted Answer

If households ignore effects on future generations, they may spend more in the present rather than saving for the future, which would reduce current national savings. Since pay as you go social security relies on current contributors to fund benefits for current retirees, reducing national savings could lead to a decrease in investment and the future capital stock.

If Households Ignore Effects on Future Generations, a Pay as You