When the Social Security System Enters Its Deficit Years and the Bonds

question 184

Multiple Choice

When the Social Security system enters its deficit years and the bonds held in the trust fund are drawn down,

• A) overall taxes will be reduced as the trust funds are used to pay benefits to retirees.
• B) the payroll taxes used to finance Social Security benefits can be reduced because the trust funds will be sufficient to pay the retirement benefits of the baby boom generation.
• C) taxes will have to be raised (or additional funds will have to be borrowed) in order to redeem the bonds held in the trust fund.
• D) income taxes will have to be reduced in order to keep the revenues and expenditures of the Social Security system in balance.

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Definitions:

Belief Perseverance

A tendency to continue to view an initial assumption as correct despite evidence to the contradictory.

Self-serving Bias

In attribution, the tendency for people to take personal credit for acts that yield positive outcomes and to deflect blame for bad outcomes by attributing them to external causes.

Fundamental Attribution Error

The tendency to overemphasize personality-based explanations for behaviors observed in others while underestimating the influence of situational factors.

Actor-observer Difference

The tendency to attribute one's own actions to situational factors while attributing others' actions to their personal characteristics.