The Commitment Problem That May Make a Forced Savings Social

question 20

Multiple Choice

The commitment problem that may make a forced savings social security program beneficial is best described by

• A)too much saving by households because the government cannot commit to providing zero retirement assistance.
• B)borrowers are unable to commit to a high real interest rate.
• C)under saving by households because the government cannot commit to providing zero retirement assistance.
• D)the government cannot commit to providing benefits when old.
• E)young households cannot commit to participating when they are old.

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Definitions:

Benefit

An advantage, privilege, or financial aid that is granted to an individual or group, often from an employer, government, or institution.

Sale of Goods Act

Legislation governing the sale of goods, ensuring that goods sold meet certain quality and ownership criteria.

Title and Possession

Legal terms that refer to the ownership (title) of an asset and the control or occupation of it (possession).

Money

A medium of exchange, unit of account, and store of value that facilitates the transaction of goods and services.