The Social Security System Is Currently Generating Tax Revenues That

question 95

Multiple Choice

The Social Security system is currently generating tax revenues that exceed the benefits paid to recipients. This surplus is

• A) being invested in foreign bonds, which will provide Americans with a source of income when the baby boom generation retires.
• B) separated from other government revenue so politicians will not spend the money during the current period.
• C) being channeled into earmarked private savings accounts.
• D) invested in government bonds, the redemption of which will require an increase in taxes (or additional Treasury borrowing).

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Definitions:

International Trade

The exchange of goods and services between countries, driven by comparative advantages and resulting in increased global economic interaction.

Autarky Price

The price of a good within a closed economy that does not engage in trade with external entities.

Consumer Surplus

The difference between the total amount that consumers are willing and able to pay for a good or service and the total amount that they actually do pay.

Autarky Price

The price of a good in a country without international trade, determined solely by domestic supply and demand.