Question 1

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 2

In 2009,the Social Security payroll tax did not apply to annual income above

Accepted Answer

A) $15,000. 
B) $32,000. 
C) $106,800. 
D) $200,000. 
A) $15,000. 
B) $32,000. 
C) $106,800. 
D) $200,000.

Question 3

Under the current Social Security system,married persons may draw benefits based on

Accepted Answer

A) only their own earnings. 
B) their own earnings or draw 50 percent of the benefits earned by their spouse. 
C) their own earnings plus 50 percent of their spouse's earnings. 
D) their own earnings plus 100 percent of their spouse's earnings. 
A) only their own earnings. 
B) their own earnings or draw 50 percent of the benefits earned by their spouse. 
C) their own earnings plus 50 percent of their spouse's earnings. 
D) their own earnings plus 100 percent of their spouse's earnings.

Question 4

Which of the following is true?

Accepted Answer

A) The regressive nature of the Social Security benefit formula works to the disadvantage of blacks and other groups with below-average earnings. 
B) Social Security works to the disadvantage of blacks and other groups with below-average life expectancy. 
C) Blacks derive a higher rate of return from their Social Security taxes than whites. 
D) Hispanics derive a lower rate of return from their Social Security taxes than both whites and blacks. 
A) The regressive nature of the Social Security benefit formula works to the disadvantage of blacks and other groups with below-average earnings. 
B) Social Security works to the disadvantage of blacks and other groups with below-average life expectancy. 
C) Blacks derive a higher rate of return from their Social Security taxes than whites. 
D) Hispanics derive a lower rate of return from their Social Security taxes than both whites and blacks.

Question 5

Detailed studies indicate that,on balance,the Social Security retirement system

Accepted Answer

A) redistributes a substantial amount of income from the rich to the poor. 
B) redistributes a substantial amount of income from whites to blacks. 
C) is particularly advantageous to those with a shorter life expectancy. 
D) is not particularly advantageous to the poor due to their shorter life expectancy. 
A) redistributes a substantial amount of income from the rich to the poor. 
B) redistributes a substantial amount of income from whites to blacks. 
C) is particularly advantageous to those with a shorter life expectancy. 
D) is not particularly advantageous to the poor due to their shorter life expectancy.

Question 6

As the baby boom generation,born during 1946 through 1960,reaches retirement age during the 2011 through 2030 period,the number of workers per Social Security beneficiary is expected to

Accepted Answer

A) increase to five. 
B) remain constant at approximately seven. 
C) decline to approximately five. 
D) decline to approximately two. 
A) increase to five. 
B) remain constant at approximately seven. 
C) decline to approximately five. 
D) decline to approximately two.

Question 7

Which of the following is true?

Accepted Answer

A) All of the current revenues flowing into the Social Security system are needed for benefit payments to current retirees. 
B) If the Social Security surplus was used to pay down the privately held federal debt,this would reduce future taxes and,thereby,make it easier to deal with the retirement of the baby boomers. 
C) During the 1980s and 1990s,most of the social security surplus was used to reduce the national debt. 
D) When the Social Security surplus is used to cover the current operating expenses of the federal government,it will make it easier for future taxpayers to provide promised Social Security benefits to baby boomers. 
A) All of the current revenues flowing into the Social Security system are needed for benefit payments to current retirees. 
B) If the Social Security surplus was used to pay down the privately held federal debt,this would reduce future taxes and,thereby,make it easier to deal with the retirement of the baby boomers. 
C) During the 1980s and 1990s,most of the social security surplus was used to reduce the national debt. 
D) When the Social Security surplus is used to cover the current operating expenses of the federal government,it will make it easier for future taxpayers to provide promised Social Security benefits to baby boomers.

Question 8

The payments made to the beneficiaries of the Social Security program are financed by

Accepted Answer

A) insurance premiums previously paid into the system by the beneficiaries. 
B) current receipts derived from the Social Security payroll tax. 
C) income derived from funds that were previously invested in stocks and bonds. 
D) governmental savings accounts based on the amount of funds the recipient previously paid into the system. 
A) insurance premiums previously paid into the system by the beneficiaries. 
B) current receipts derived from the Social Security payroll tax. 
C) income derived from funds that were previously invested in stocks and bonds. 
D) governmental savings accounts based on the amount of funds the recipient previously paid into the system.

Question 9

The Social Security system is currently generating tax revenues that exceed the benefits paid to recipients.This surplus is

Accepted Answer

A) being invested in foreign bonds,which will provide Americans with a source of income when the baby boom generation retires. 
B) separated from other government revenue so politicians will not spend the money during the current period. 
C) being channeled into earmarked private savings accounts. 
D) invested in government bonds,the redemption of which will require an increase in taxes (or additional Treasury borrowing). 
A) being invested in foreign bonds,which will provide Americans with a source of income when the baby boom generation retires. 
B) separated from other government revenue so politicians will not spend the money during the current period. 
C) being channeled into earmarked private savings accounts. 
D) invested in government bonds,the redemption of which will require an increase in taxes (or additional Treasury borrowing).

Question 10

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 11

Which of the following is true?

Accepted Answer

A) Labor participation tends to increase as spousal earnings increase. 
B) Social Security works to the disadvantage of low-wage workers due to their shorter life expectancy. 
C) Low-wage workers derive a higher rate of return from their Social Security taxes than high-wage workers. 
D) High-wage workers generally begin full-time work at younger ages than low-wage workers. 
A) Labor participation tends to increase as spousal earnings increase. 
B) Social Security works to the disadvantage of low-wage workers due to their shorter life expectancy. 
C) Low-wage workers derive a higher rate of return from their Social Security taxes than high-wage workers. 
D) High-wage workers generally begin full-time work at younger ages than low-wage workers.

Question 12

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.

Question 13

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 14

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.

Exam 30: The Economics of Social Security

The Social Security program is primarily a

In 2009,the Social Security payroll tax did not apply to annual income above

Under the current Social Security system,married persons may draw benefits based on

Which of the following is true?

Detailed studies indicate that,on balance,the Social Security retirement system

As the baby boom generation,born during 1946 through 1960,reaches retirement age during the 2011 through 2030 period,the number of workers per Social Security beneficiary is expected to

Which of the following is true?

The payments made to the beneficiaries of the Social Security program are financed by

The Social Security system is currently generating tax revenues that exceed the benefits paid to recipients.This surplus is

The Social Security Trust Fund

Which of the following is true?

Social Security

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

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?

The Economic Approach

Asome Tools of the Economist

Asupply,demand,and the Market Process

Asupply and Demand: Applications and Extensions

Difficult Cases for the Market and the Role of Government

The Economics of Collective Decision-Making

Ataking the Nations Economic Pulse

Economic Fluctuations, unemployment, and Inflation

Aan Introduction to Basic Macroeconomic Markets

Dynamic Change, economic Fluctuations, and the Ad-As Model

Fiscal Policy: the Keynesian View and Historical Perspective

Fiscal Policy, incentives, and Secondary Effects

Amoney and the Banking System

Modern Macroeconomics and Monetary Policy

Stabilization Policy, output, and Employment

Creating an Environment for Growth and Prosperity

Institutions,policies,and Cross-Country Differences in Income and Growth

Gaining From International Trade

International Finance and the Foreign Exchange Market

Consumer Choice and Elasticity

Acosts and the Supply of Goods

Aprice Takers and the Competitive Process

Price-Searcher Markets With Low Entry Barriers

Aprice-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

Government Spending and Taxation

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

Great Debates in Economics: Keynes Versus Hayek

The Crisis of 2008: Causes and Lessons for the Future

Lessons From the Great Depression

Lessons From Japan and Canada

The Federal Budget and the National Debt

The Economics of Healthcare

Education: Problems and Performance

Earnings Differences Between Men and Women

Do Labor Unions Increase the Wages of Workers

The Question of Resource Exhaustion

Difficult Environmental Cases and the Role of Government

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