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:

Trade Balance

The variance between what a nation sells and buys from abroad in terms of goods and services.

National Saving

The total amount saved by a nation's households and businesses, plus government budget surplus, which can be used for investment.

Open-Economy Macroeconomic Model

A model that analyzes an economy that engages in international trade, considering the impact of exports, imports, and capital flows.

Tariffs

Tariffs are taxes imposed by a government on imported goods and services to protect domestic industries, raise revenue, or influence trade balance.