1) Which of the following would describe someone who would tend to benefit more

Question

1) Which of the following would describe someone who would tend to benefit more from Social Security? (ALL THAT APPLY)

high income, married, young, female, old, low income, single, male

Use the following information for the next 9 questions. You should draw a graph that depicts the situation below and use your picture to answer the questions.

Assume that wages and prices are sticky and that we start at a long-run equilibrium. Assume that at this initial point, the growth rate of the money supply is 6%, the growth rate of the velocity of money is 2% and that the real economic growth rate is 4%.

Now assume that oil prices increase. After the increase in oil prices, the inflation rate in the economy is 9%.

Now assume that the federal government decides to increase government spending in order to combat the rise in oil prices. After the increase in government spending the total spending growth is now 14%.

2.After the increase in government spending (point 3), what is the growth rate of the velocity of money?

3.After the increase in government spending (point 3), what is the inflation rate in your graph?

Explanation / Answer

Social Security benefits are calculated based on highest 35 years of earnings or half of spouse’s benefits -- whichever is higher -- if one retires at full retirement age (currently 66). Thus an old would tends to benefits more from social security.

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