Social Security

question 108

Multiple Choice

Social Security

• A)Is an intergenerational redistribution of income.
• B)Is financed like private pension plans.
• C)Results in regressive wage replacement rates.

---

Definitions:

Present Value

The value as of now of a future amount of money or subsequent cash flows, based on a chosen return rate.

Compound Interest

Interest that is determined by taking into account not only the original principal of a deposit or loan but also all the interest that has been compounded in previous cycles.

Earnings Rate

The return on an investment or the amount of profit made compared to the amount of money invested.

Internal Rate of Return

An investment’s projected rate of return, calculated by finding the discount rate that sets the net present value of all cash flows (both positive and negative) to zero.