Question 1

By 2030, the number of workers per Social Security beneficiary will be approximately

Accepted Answer

A) two. 
B) three. 
C) four. 
D) six. 
A) two. 
B) three. 
C) four. 
D) six. A

Question 2

Social Security

Accepted Answer

A) collects taxes from current workers and invests this money to repay the workers when they retire. 
B) is based on the same principles as private insurance programs. 
C) is an intergenerational transfer program that takes money from current workers and transfers it to current retirees. 
D) is designed so that administrative decisions can be made independent of political concerns. 
A) collects taxes from current workers and invests this money to repay the workers when they retire. 
B) is based on the same principles as private insurance programs. 
C) is an intergenerational transfer program that takes money from current workers and transfers it to current retirees. 
D) is designed so that administrative decisions can be made independent of political concerns. C

Question 3

Which of the following tends to increase the attractiveness of a retirement system based on savings and investment rather than pay-as-you-go principles?

Accepted Answer

A) a persistent increase in the number of workers relative to the number of retirees 
B) a large number of workers relative to the number of retirees 
C) a reduction in the number of workers relative to the number of retirees 
D) a persistent increase in the life expectancy of retirees. 
A) a persistent increase in the number of workers relative to the number of retirees 
B) a large number of workers relative to the number of retirees 
C) a reduction in the number of workers relative to the number of retirees 
D) a persistent increase in the life expectancy of retirees. C

Question 4

A shortfall of tax revenues at current rates relative to promised benefits for a government program is called

Accepted Answer

A) a personal retirement account. 
B) an expected equity. 
C) a promissory note. 
D) an unfunded liability. 
A) a personal retirement account. 
B) an expected equity. 
C) a promissory note. 
D) an unfunded liability.

Question 5

(I) Because married women are permitted to receive benefits based on either their own earnings or 50 percent of the benefits earned by their spouse, whichever is greater, the payroll tax takes a big chunk of the earnings of many working women without providing any significant additional benefits to them. (II) Because blacks have a shorter life expectancy, they are economically disadvantaged by Social Security relative to whites and Hispanics.

Accepted Answer

A) I is true; II is false. 
B) I is false; II is true. 
C) Both I and II are false. 
D) Both I and II are true. 
A) I is true; II is false. 
B) I is false; II is true. 
C) Both I and II are false. 
D) Both I and II are true.

Question 6

Which of the following is true?

Accepted Answer

A) The regressive nature of the Social Security benefit formula works to the advantage of groups with below average earnings. 
B) Groups with an below average life expectancy gain from Social Security because they will typically draw retirement benefits over a more lengthy period of time. 
C) The life expectancy of Hispanics at age 20 is generally lower than the figures for whites and blacks. 
D) Hispanics derive a higher return from their Social Security taxes than whites, and substantially higher than blacks. 
A) The regressive nature of the Social Security benefit formula works to the advantage of groups with below average earnings. 
B) Groups with an below average life expectancy gain from Social Security because they will typically draw retirement benefits over a more lengthy period of time. 
C) The life expectancy of Hispanics at age 20 is generally lower than the figures for whites and blacks. 
D) Hispanics derive a higher return from their Social Security taxes than whites, and substantially higher than blacks.

Question 7

On average, persons with more education tend to draw Social Security benefits for a

Accepted Answer

A) longer period of time than average 
B) shorter period of time than average 
C) period of time that is comparable to the U.S. average 
D) longer period of time if they have a master's degree but a shorter period of time if they have a Ph.D. 
A) longer period of time than average 
B) shorter period of time than average 
C) period of time that is comparable to the U.S. average 
D) longer period of time if they have a master's degree but a shorter period of time if they have a Ph.D.

Question 8

As the baby boom generation retires in the future, Social Security will have to

Accepted Answer

A) reduce benefits to retirees. 
B) increase taxes on workers. 
C) borrow money. 
D) utilize some combination of a, b, and c. 
A) reduce benefits to retirees. 
B) increase taxes on workers. 
C) borrow money. 
D) utilize some combination of a, b, and c.

Question 9

Which of the following countries have moved toward a retirement system based more on personal retirement accounts (and savings and investment principles) rather than pay-as-you-go principles?

Accepted Answer

A) United Kingdom 
B) Canada 
C) France 
D) Japan 
A) United Kingdom 
B) Canada 
C) France 
D) Japan

Question 10

The net value to the federal government of the bonds currently held in the Social Security Trust Fund is

Accepted Answer

A) approximately $1 trillion. 
B) now approaching $2 trillion. 
C) greater than $2.5 trillion. 
D) zero, because the federal government is both the payee and recipient of the interest and principal represented by these bonds. 
A) approximately $1 trillion. 
B) now approaching $2 trillion. 
C) greater than $2.5 trillion. 
D) zero, because the federal government is both the payee and recipient of the interest and principal represented by these bonds.

Question 11

The surplus in the Social Security retirement system is currently held in the form of

Accepted Answer

A) U.S. Treasury bonds. 
B) gold. 
C) U.S. corporate stock. 
D) cash reserves in major U.S. banks. 
A) U.S. Treasury bonds. 
B) gold. 
C) U.S. corporate stock. 
D) cash reserves in major U.S. banks.

Question 12

Which of the following countries has not taken steps to privatize its Social Security system?

Accepted Answer

A) United States 
B) Mexico 
C) United Kingdom 
D) Chile 
A) United States 
B) Mexico 
C) United Kingdom 
D) Chile

Question 13

The Social Security Trust Fund

Accepted Answer

A) will provide a stream of future revenue for the federal government. 
B) is a "pot" of money set aside for the payment of future benefits. 
C) is a net asset of the U.S. Treasury worth approximately $2 trillion. 
D) is of zero asset value to the federal government. 
A) will provide a stream of future revenue for the federal government. 
B) is a "pot" of money set aside for the payment of future benefits. 
C) is a net asset of the U.S. Treasury worth approximately $2 trillion. 
D) is of zero asset value to the federal government.

Question 14

Persons who die before age 65 or soon thereafter, receive little or nothing from their Social Security payroll tax payments. Which of the following groups is harmed the most by this attribute of the Social Security retirement system?

Accepted Answer

A) High-income workers. 
B) Hispanics. 
C) Heavy cigarette smokers. 
D) College graduates. 
A) High-income workers. 
B) Hispanics. 
C) Heavy cigarette smokers. 
D) College graduates.

Question 15

When the Social Security surplus is used to cover the current operating expenses of the federal government, it will

Accepted Answer

A) make it easier for future taxpayers to provide promised Social Security benefits to baby boomers. 
B) reduce the outstanding debt of the federal government. 
C) make it possible for Congress and the president to spend more without raising current taxes or borrowing from the general public. 
D) increase the credibility of the Social Security benefits promised to future retirees. 
A) make it easier for future taxpayers to provide promised Social Security benefits to baby boomers. 
B) reduce the outstanding debt of the federal government. 
C) make it possible for Congress and the president to spend more without raising current taxes or borrowing from the general public. 
D) increase the credibility of the Social Security benefits promised to future retirees.

Question 16

Demographic conditions

Accepted Answer

A) were much less favorable for the Social Security system in 1950 than is currently the case. 
B) are currently unfavorable because the number of retirees is growing rapidly as the result of the high birth rate in the United States during 1930-1945. 
C) will be less favorable for the Social Security system once the baby boom generation begins to retire around 2011. 
D) don't affect the financial status of the Social Security system because it is based on the same principles as private insurance programs. 
A) were much less favorable for the Social Security system in 1950 than is currently the case. 
B) are currently unfavorable because the number of retirees is growing rapidly as the result of the high birth rate in the United States during 1930-1945. 
C) will be less favorable for the Social Security system once the baby boom generation begins to retire around 2011. 
D) don't affect the financial status of the Social Security system because it is based on the same principles as private insurance programs.

Question 17

The Social Security program is primarily a

Accepted Answer

A) compulsory retirement income program set up on sound insurance principles. 
B) forced-savings program where workers save during their working years and receive the principal and interest on these savings at retirement. 
C) program designed to tax current workers in order to provide benefits for current retirees. 
D) voluntary savings program run by the government. 
A) compulsory retirement income program set up on sound insurance principles. 
B) forced-savings program where workers save during their working years and receive the principal and interest on these savings at retirement. 
C) program designed to tax current workers in order to provide benefits for current retirees. 
D) voluntary savings program run by the government.

Question 18

The current surplus of the Social Security system is expected to become a deficit sometime around 2018 because the

Accepted Answer

A) payroll tax rate is scheduled to decline at that time. 
B) number of workers relative to the number of Social Security recipients will decline as the baby boom generation moves into the retirement phase of life. 
C) stock market is not expected to perform nearly as well during the next two decades as was the case during the 1980s and 1990s. 
D) growth rate of the U.S. economy is expected to slow during the next two decades. 
A) payroll tax rate is scheduled to decline at that time. 
B) number of workers relative to the number of Social Security recipients will decline as the baby boom generation moves into the retirement phase of life. 
C) stock market is not expected to perform nearly as well during the next two decades as was the case during the 1980s and 1990s. 
D) growth rate of the U.S. economy is expected to slow during the next two decades.

Question 19

The bonds held in the Social Security Trust Fund

Accepted Answer

A) are a valuable asset of the federal government. 
B) will generate a future stream of net income for the federal government. 
C) are an IOU from one government agency (the U.S. Treasury) to another (the Social Security Administration). 
D) are necessary to provide retirement benefits for future retirees. 
A) are a valuable asset of the federal government. 
B) will generate a future stream of net income for the federal government. 
C) are an IOU from one government agency (the U.S. Treasury) to another (the Social Security Administration). 
D) are necessary to provide retirement benefits for future retirees.

Question 20

In 2010, the number of workers per Social Security beneficiary was approximately ____; by the year 2030, this figure is expected to ____.

Accepted Answer

A) 5; increase to approximately 8 
B) 2.9; fall to approximately 2.1 
C) 2.2; increase to approximately 3.2 
D) 8; fall to approximately 5 
A) 5; increase to approximately 8 
B) 2.9; fall to approximately 2.1 
C) 2.2; increase to approximately 3.2 
D) 8; fall to approximately 5

Exam 17: Appendix: the Economics of Social Security

By 2030, the number of workers per Social Security beneficiary will be approximately

Social Security

Which of the following tends to increase the attractiveness of a retirement system based on savings and investment rather than pay-as-you-go principles?

A shortfall of tax revenues at current rates relative to promised benefits for a government program is called

Which of the following is true?

On average, persons with more education tend to draw Social Security benefits for a

As the baby boom generation retires in the future, Social Security will have to

Which of the following countries have moved toward a retirement system based more on personal retirement accounts (and savings and investment principles) rather than pay-as-you-go principles?

The net value to the federal government of the bonds currently held in the Social Security Trust Fund is

The surplus in the Social Security retirement system is currently held in the form of

Which of the following countries has not taken steps to privatize its Social Security system?

The Social Security Trust Fund

Persons who die before age 65 or soon thereafter, receive little or nothing from their Social Security payroll tax payments. Which of the following groups is harmed the most by this attribute of the Social Security retirement system?

When the Social Security surplus is used to cover the current operating expenses of the federal government, it will

Demographic conditions

The Social Security program is primarily a

The current surplus of the Social Security system is expected to become a deficit sometime around 2018 because the

The bonds held in the Social Security Trust Fund

In 2010, the number of workers per Social Security beneficiary was approximately ____; by the year 2030, this figure is expected to ____.

The Economic Approach

A: Some Tools of the Economist

B: Some Tools of the Economist

A: Supply, Demand, and the Market Process

B: Supply, Demand, and the Market Process

A: Supply and Demand: Applications and Extensions

B: Supply and Demand: Applications and Extensions

Difficult Cases for the Market and the Role of Government

The Economics of Collective Decision-Making

Consumer Choice and Elasticity

A: Costs and the Supply of Goods

B: Costs and the Supply of Goods

A: Price Takers and the Competitive Process

B: Price Takers and the Competitive Process

Price-Searcher Markets With Low Entry Barriers

A: Price-Searcher Markets With High Entry Barriers

B: Price-Searcher Markets With High Entry Barriers

The Supply of and Demand for Productive Resources

Earnings, Productivity, and the Job Market

Investment, the Capital Market, and the Wealth of Nations

Income Inequality and Poverty

Appendix: Government Spending and Taxation

Appendix: the Stock Market: Its Function, Performance, and Potential As an Investment Opportunity

Appendix: Great Debates in Economics: Keynes Versus Hayek

Appendix: the Crisis of 2008: Causes and Lessons for the Future

Appendix: Lessons From the Great Depression

Appendix: the Economics of Healthcare

Appendix:education: Problems and Performance

Appendix: Earnings Differences Between Men and Women

Appendix: the Question of Resource Exhaustion

Appendix: Do Labor Unions Increase the Wages of Workers

Appendix: Difficult Environmental Cases and the Role of Government

Filters

In 2010, the number of workers per Social Security beneficiary was approximately ; by the year 2030, this figure is expected to .