The Social Security System Is a Pay-As-You-Go Arrangement Where Contributions

question 389

Multiple Choice

The Social Security system is a pay-as-you-go arrangement where contributions by today's workers are paid out to yesterday's retirees. If part of today's contributions go into private retirement accounts, they cannot be paid out. To make up the shortage, the government would have to borrow massive amounts of money. Hence, Social Security privatization would cause a huge increase in the federal deficit.

• A) Nonargument.
• B) Argument; conclusion: If part of today's contributions ... cannot be paid out.
• C) Argument; conclusion: Social security privatization ... federal deficit.
• D) Argument; conclusion: The Social Security System ... to yesterday's retirees.
• E) Argument; conclusion: To make up the shortage ... massive amounts of money.

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Definitions:

Excise Taxes

Taxes imposed on specific goods, services, or transactions, often aimed at discouraging consumption of certain items or raising revenue.

Government Hiring

The process by which government entities recruit and employ individuals to work in various public sector roles, affecting the size and efficiency of government operations.

Circular Flow Model

An economic model illustrating the flow of resources, goods, services, and money between sectors in an economy.

Net Taxes

Net taxes refer to taxes paid to the government minus transfer payments received from the government, showing the actual tax burden on individuals or businesses.