If Households Ignore Effects on Future Generations, When a Pay

question 24

Multiple Choice

If households ignore effects on future generations, when a pay as you go social security system starts, the then elderly:

• A)have a negative income effect on their consumption.
• B)receive benefits that in present value is greater than the present value of their contributions to the system.
• C)receive low returns on any taxes paid into the system.
• D)all of the above.

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Definitions:

Project Life

The total duration from the initiation to the completion of a project, covering all stages of development and execution.

Accounting Break-Even

The point at which total revenues equal total expenses, and there is no profit or loss, specifically from an accounting perspective that includes non-cash expenses.

Depreciation Expense

An accounting method used to allocate the cost of a tangible asset over its useful life, reflecting wear and tear or obsolescence.

Fixed Costs

Costs that remain constant regardless of the amount of products or services a company produces, including expenditures like rent, wages, and insurance fees.