Explain the funding structure of the Social Security and Medicare programs. Why are these programs in danger of running out of funds in the future?
What will be an ideal response?
Both Social Security and Medicare are structured as pay-as-you-go systems, which means the current benefits being paid to recipients are coming from contributions of current workers. These programs are in danger of running out of funds in the future because the number of retirees is increasing relative to the number of workers paying into the system, the retirees are living longer, and medical expenses are increasing. This means that in the decades to come the government will be funding both retirement benefits and more expensive health care, for more retirees, for a longer period of time, and there are now and will continue to be fewer workers per retiree than there were in past years.
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A decrease in the price of a good will
a. increase supply. b. decrease supply. c. increase quantity supplied. d. decrease quantity supplied.
Which of the following statements is correct?
a. The more similar Firm A's product is to Firm B's product, the more likely Firm A is to advertise. b. Monopolistically competitive firms advertise in order to increase the elasticity of the demand curve they face. c. According to the signaling theory, the more product information an advertisement contains, the more effective it is. d. Brand names may help consumers if they provide information about the quality of a product when acquiring such information is difficult.