Congress expects Social Security and Medicaid to fall short of revenue that will be needed to cover promised benefits in the future. On what evidence are these expectations based?
Medicare claims are expected to grow rapidly over the next forty years for two reasons. First, our
population is aging and older people have greater health-care needs. Second, new health-care technologies
are available in medicine that make it possible to invest ever greater sums in the health needs of the senior
population. Also, the ratio of working people to retirees has fallen considerably, while the standard of
living of retired people has risen. This means that fewer workers will shoulder an increasingly larger Social
Security tax burden.
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There is a rise in labor productivity in the economy. As a result, in the short run Real GDP __________ and the price level __________
A) rises; falls B) falls; rises C) falls; falls D) rises; rises E) remains constant; remains constant
Many governments actively work to:
A. discourage foreign direct investment, in an effort to encourage locals to invest in their own economy. B. discourage foreign direct investment, in an effort to avoid "crowding out." C. attract foreign direct investment, hoping it will build up their capital stock when domestic savings aren't sufficient. D. attract foreign direct investment, so that when foreign companies invest in local firms, they can transfer human capital to local managers.