If you overhear a group of people talking about their plans to save for their retirement and one of them says that it causes them to save less and the other says they will save more, you would conclude
A. that both are rational, they just have different perspectives.
B. the person decreasing saving is rational and the other is irrational.
C. the person increasing saving is rational and the other is irrational.
D. neither are rational, Social Security affects no one's saving.
Answer: A
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If a monopolistically competitive firm is producing at an output where marginal revenue is $111.11 and marginal cost is $118, then to maximize profits the firm should increase its output.
Will a large quantity of bonds held in the Social Security Trust Fund make it easier to deal with the retirement of the baby boomers?
a. Yes; the federal government will be able to redeem these bonds in the future without raising taxes or increasing its borrowing. b. Yes; the interest on these bonds will provide the federal government with a stream of net revenue in the future. c. Yes, but only if the federal government holds these bonds until they mature. d. No; the federal government cannot redeem the bonds without raising revenues for their redemption from other sources.