Economics: The Basics 1st Edition by Mike Mandel

Exercise 1

Say whether each of the following statements is true or false.
a) In the life cycle theory of retirement, people save when they are retired.
b) In the life cycle theory of retirement, net worth peaks in middle age.
c) The retirement uncertainty problem arises because you don't know how long you will live after retirement.
d) The retirement poverty problem arises because you don't want to be poor during retirement.
e) A defined benefit retirement plan pays you a predetermined amount of money monthly when you retire.
f) Part-time workers are more likely than full-time workers to participate in defined contribution plans.
g) Employer retirement plans are useful in solving the retirement poverty problem.
h) Social Security transfers money from current workers to current retirees.
i) Social Security is not an important source of income for current retirees.
j) Health care's share of GDP has been shrinking.
k) The adverse selection problem means that healthier people are less likely to buy health insurance because they are less likely to need it.
l) High-wage workers are more likely to be covered by employer-provided health care plans than are low-wage workers.
m) Medicare is completely funded by a payroll tax paid by employees and employers.
n) One reason why health care costs are rising quickly is third-party payments.