Question 1

Explain how the Social Security program is partly an insurance plan and partly a form of welfare.

Accepted Answer

The answer of Explain how the Social Security program is...

Question 2

During the 1980s,assets in the Social Security system fell so low they covered less than two months o f benefit payments.

Accepted Answer

This is true. In 1983, the Social Security Trust Fund was on the brink of exhaustion, with assets covering only about two months of benefit payments. This led to the formation of the National Commission on Social Security Reform, which recommended changes to the system to ensure its long-term solvency.

Question 3

The Social Security trust fund is an asset to the federal government and a liability,simultaneously.

Accepted Answer

The Social Security trust fund is an asset to the Social Security Administration but a liability to the federal government, as it represents future obligations to pay benefits.

Question 4

Give two reasons why Social Security is compulsory for most workers.

Accepted Answer

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Question 5

The unfunded nature of the Social Security system has no effect on investment.

Accepted Answer

The unfunded nature of the Social Security system can affect investment by potentially reducing national savings, which in turn can reduce the amount of capital available for investment.

Question 6

In 1950 there were 16 individuals contributing to Social Security for every one person collecting benefits.

Accepted Answer

This is true according to historical data from the Social Security Administration.

Question 7

Explain the main difference between the pay-as-you-go system employed by Social Security and a private pension plan.

Accepted Answer

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Question 8

Half of Social Security taxes are paid by the employer and half are paid by the employee.What would happen if the employer was made to pay the entire amount? Explain your reasoning.

Accepted Answer

The answer of Half of Social Security taxes are paid...

Question 9

For an individual concerned with whether or not the Social Security system provides a good rate of return on the money paid into the system,she only needs to look at the return on investment for previous beneficiaries.

Accepted Answer

The rate of return for Social Security cannot be determined by looking at the return on investment for previous beneficiaries because the amount paid in by an individual is not directly linked to the benefits received. Other factors such as inflation, changes in the economy, and demographic shifts can also affect the overall return on investment.

Question 10

Using a graph,illustrate the effect of an unfunded pension plan on the level of investment and the interest rate.Assume an annual amount going into the pension plan of R.What happens to interest rates and the level of investment? Explain your answer.

Accepted Answer

The answer of Using a graph,illustrate the effect of an...

Question 11

In an apolitical world with a constant tax rate and program characteristics,the rate of return on Social Security contributions is equal to the growth in national income.

Accepted Answer

In a stable economic environment with constant tax rates and program characteristics, the rate of return on Social Security contributions aligns with the growth rate of national income, as both are influenced by similar economic factors.

Question 12

In 1950,Social Security benefits increased by over 50 percent.

Accepted Answer

This is true. In 1950, Social Security benefits increased by over 50 percent due to a combination of factors, including a rise in the cost of living and an increase in the average wage index.

Quiz 20: Social Security