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Posted by on Monday, October 12, 2009 at 5:40pm.

The chapter states that the elderly population in the U.S. is growing more rapidly than the total population. In particular, the number of the total workers is rising slowly, while the number of retirees is rising quickly. Concerned about the future of Social Security, some members of Congress propose a “freeze” on the program.
a.) If total expenditures were frozen, what would happen to benefits per retiree? To tax payments per worker? (Assume that Social Security taxes and receipts are balanced in each year).
b.) If benefits per retiree were frozen, what would happen to total expenditures? To tax payments per worker?
c.) If tax payments per worker were frozen, what would happen to total expenditures? To benefits per retiree?
d.) What do your answers to parts (a), (b), and (c) imply about the difficult decisions faced by policy makers?

Suppose that your state raises its sales tax from 5 percent to 6 percent. The state revenue commissioner forecasts a 20 percent increase in sales tax revenue. Is this plausible? Explain.

  • 12th grade Economics - , Monday, October 12, 2009 at 6:01pm

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