Explain why the Social Security system faces problems. Discuss the possible solutions to these problems
What will be an ideal response?
Social security faces problems because it is a pay-as-you-go system where benefits are not tied to contributions. This has resulted in substantial underfunding, which may be exacerbated by the retirement of the baby boomers.
Solutions include increases in taxes and benefit reductions, including additional increases in the retirement age. The other alternative is privatization. This could involve government purchases of corporate securities, shift of fund assets to private accounts that could be invested in corporate securities, or creation of new private accounts that could be invested in corporate securities, funded by increased taxes.
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Does the presence of asymmetric information necessarily imply that governments should intervene in a market?
What will be an ideal response?
The issue of inequality has become prominent because ofÂ
A. an increased sense of justice. B. a decrease in the strength of capitalism. C. the widening wage disparity. D. a consistent fall in incomes.