One Adverse Effect of the Pay-As-You-Go System of Funding Social

Multiple Choice

One adverse effect of the pay-as-you-go system of funding Social Security is that:

A) it builds up a surplus of savings,which increases interest rates.
B) it reduces private capital formation,thus reducing future incomes.
C) it reduces the wealth of the elderly who spend most of their income on consumption rather than on investment goods.
D) it creates an income disparity between the working age population and the elderly.