In what way(s) can a pension plan be seen as the opposite of life insurance?
What will be an ideal response?
A pension plan pays off if you live; life insurance pays off if you don't. Both vehicles have some similarities; with a pension plan a saver makes regular payments (which may or may not be specified, depending on the type of pension plan) which are invested by the institution that oversees the plan. Upon retirement (or other specified circumstances) the person can draw funds out of the plan. With an insurance policy the insured makes regular payments of premiums (the amount of which are set by analysis of risk factors) and the policy would pay off only in the case of the insured's death. Indeed, with term insurance, the insured pays the premium and if he/she lives there is no payoff at all. That's why term insurance is usually cheaper than whole life insurance, particularly for younger people.
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The production function is the
a. increase in the amount of output from an additional unit of labor. b. marginal product of an input times the price of output. c. relationship between the quantity of inputs and output. d. shift in labor demand caused by a change in the price of output.
The GDP deflator in year 2 is 105, using year 1 as the base year. This means that, on average, the cost of goods and services is
A) 5% higher in year 2 than in year 1. B) 105% higher in year 2 than in year 1. C) 5% higher in year 1 than in year 2. D) 105% higher in year 1 than in year 2.