When the Social Security System Begins Running a Deficit, the Bonds

question 76

Multiple Choice

When the Social Security system begins running a deficit, the bonds in the trust fund will be drawn down. The funds to redeem these bonds will have to come from

• A) higher taxes, spending reductions in other programs, or additional government borrowing.
• B) the surplus funds deposited in governmental banking accounts.
• C) equity capital being liquidated.
• D) the sale of private equities and securities that the government has been purchasing with the funds.

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Definitions:

Subsidiary's Stock

Shares of ownership in a company which is controlled by another firm, where the controlling firm owns more than 50% of the subsidiary's stock.

Preliminary Injunction

A temporary court order issued at the beginning of a legal action, prohibiting a party from performing a specific act until a final decision is made.

Merger

The process by which two or more companies combine into one entity, often to expand market share or reduce competition.

Registration Statement

A legal document filed with securities regulatory authorities disclosing important details about a company’s operations, securities, and management, primarily for the public and investors.