Social security is an example of a(n) _______________ transfer program. Monies p

Question

Social security is an example of a(n) _______________ transfer program. Monies paid this year to social security beneficiaries come from ________________. Question 8 options:

intergenerational; previous taxes paid by those beneficiaries when they worked.

intragenerational; previous taxes paid by those beneficiaries when they worked.

intergenerational; taxes collected this year from current workers.

fiscal; taxes paid by current retirees in years past plus the accumulated interest.

A one billion dollar increase in government purchases will have a greater effect (multiplier is greater) on GDP than a one billion dollar decrease in taxes because

Question 9 options:

tax cuts increase the deficit; an increase in government purchases does not.

households generally maintain their level of saving even though taxes rise.

a tax cut is not all spent; instead part is saved.

there is no difference. They both have the same effect.

tax cuts increase the deficit; an increase in government purchases does not.

households generally maintain their level of saving even though taxes rise.

a tax cut is not all spent; instead part is saved.

there is no difference. They both have the same effect.

Explanation / Answer

1. Social security is an example of a(n) intergenerational transfer program. Monies paid this year to social securities beneficiaries come from previous taxes paid by those beneficiaries when they worked.

Explanation: Intergenerational transfer program Eg. Includes Social Security, Medicare, and Medicaid.

A famous quote on Social security is "If you make too much, we'll tax your benefits.", that means your Social Security benefits come from paying taxes while you were working

2. A one billion dollar increase in government purchases will have a greater effect (multiplier is greater) on GDP than a one billion dollar decrease in taxes because

Solution: D there is no difference. They both have the same effect.

Explanation: Using the GDP equation, Y = C + I + G + (X-M) we calculate that it dont make any difference

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