Which of the Following Is True of Defined Contribution Plan

question 25

Multiple Choice

Which of the following is true of defined contribution plan?

• A)It is more favourable to long-service employees.
• B)It provides an explicit benefit which is easily communicated.
• C)It does not make employer costs known.
• D)It makes the employer accountable for the risks associated with changes in inflation and interest rates.
• E)It does not require managing of surplus or deficit in pension fund.

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Definitions:

Supply Shift

A movement of the supply curve to the left or right, indicating a change in the quantity supplied at each price, usually in response to a change in determinants other than price.

Total Surplus

The sum of consumer and producer surplus, representing the total net benefit to society from the production and consumption of goods or services.

Consumer Surplus

The discrepancy between the total price consumers are ready to pay for a good or service and what they actually pay for it.

Producer Surplus

The disparity between the price at which sellers are prepared to offer a product and the actual selling price they get.