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Questions and Answers
What is the primary concern in many countries, particularly developed countries, due to the shrinking working population and increasing old generation?
What is the primary concern in many countries, particularly developed countries, due to the shrinking working population and increasing old generation?
- Inefficient public pension funds
- Rise in life expectancy
- Insufficient social security benefits
- Inability of contributions to meet benefit outlays (correct)
In a Fully Funded system, how are social security benefits determined?
In a Fully Funded system, how are social security benefits determined?
- By the contributions made by the working population
- By the payoff the government gets in the private credit market (correct)
- By the government's discretion
- By the accumulated savings in the private pension funds
What is a potential problem with allowing individuals to choose where to invest their social security savings?
What is a potential problem with allowing individuals to choose where to invest their social security savings?
- They may choose risky assets and expect a government bailout (correct)
- They may invest in socially responsible investments
- They may choose low-risk assets
- They may not invest at all
What is the primary advantage of a Fully Funded system over a Pay-as-you-go system?
What is the primary advantage of a Fully Funded system over a Pay-as-you-go system?
What is a potential consequence of insuring retirement accounts, similar to bank deposits?
What is a potential consequence of insuring retirement accounts, similar to bank deposits?
What is a factor contributing to the growth of private pension funds?
What is a factor contributing to the growth of private pension funds?
In a Pay-as-you-go system, who pays for the social security benefits received by the retired population?
In a Pay-as-you-go system, who pays for the social security benefits received by the retired population?
What is the primary difference between a Fully Funded system and a Pay-as-you-go system?
What is the primary difference between a Fully Funded system and a Pay-as-you-go system?
In a Fully Funded system, who finances the retirement benefits?
In a Fully Funded system, who finances the retirement benefits?
What is the purpose of social security programs, such as Pension Funds and Social Security Programs?
What is the purpose of social security programs, such as Pension Funds and Social Security Programs?
What is the primary advantage of social security programs, according to the permanent income hypothesis?
What is the primary advantage of social security programs, according to the permanent income hypothesis?
In a Pay-as-you-go system, what happens to the social security benefits received by the retired population if the current working population's income increases?
In a Pay-as-you-go system, what happens to the social security benefits received by the retired population if the current working population's income increases?
What type of information problem arises when would-be borrowers know more about their characteristics than do lenders?
What type of information problem arises when would-be borrowers know more about their characteristics than do lenders?
Which of the following is a result of a borrower having an incentive to engage in undesirable activities, making it more likely they won't pay the loan back?
Which of the following is a result of a borrower having an incentive to engage in undesirable activities, making it more likely they won't pay the loan back?
What can a lender use to overcome the problem of limited commitment from a borrower?
What can a lender use to overcome the problem of limited commitment from a borrower?
What type of problem occurs when unhealthy people are more likely to seek insurance coverage for their known medical problems?
What type of problem occurs when unhealthy people are more likely to seek insurance coverage for their known medical problems?
What type of risk does a lender face if a borrower has incentives to engage in undesirable activities?
What type of risk does a lender face if a borrower has incentives to engage in undesirable activities?
What is the primary purpose of collateral in a loan agreement?
What is the primary purpose of collateral in a loan agreement?
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