What Is the Difference Between a Pre-Funded Model and a "Pay-As-You-Go

question 41

Multiple Choice

What is the difference between a pre-funded model and a "pay-as-you-go" system for social safety net programs?

• A) Entitlements come from current earnings of other people in a "pay-as-you-go" system.
• B) Workers' contributions are accrued over their lifetime in a "pay-as-you-go" system.
• C) High rates of medical "overtreatment" occur in a pre-funded model.
• D) Affordable housing and universal design affect a pre-funded model.

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Definitions:

Interest Rate

The cost of borrowing money, expressed as a percentage of the total amount loaned, or the profit earned on savings and investments.

Money Market Equilibrium

The state where the supply of and the demand for money balances, resulting in economic stability at a given interest rate.

Interest Rate

The amount charged by lenders to borrowers for the use of assets, expressed as a percentage of the principal, or the amount earned by an investment.

Quantity of Money

The total amount of money in circulation or in existence in a country or the economy at a specific time.