One Argument Offered by Economists for Having a Social Security

question 47

Multiple Choice

One argument offered by economists for having a Social Security system is that if there were no Social Security, workers might

• A)work too long.
• B)not fully comprehend how hard it might be to continue working into their 70s.
• C)save too much.
• D)overestimate the value of retirement.

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Definitions:

Nominal Rate

The nominal rate is the interest rate stated on a loan or investment agreement, not accounting for inflation or other factors that affect the real rate of return.

Compound Annual Rate

The rate at which an investment grows annually when interest is reinvested to earn additional interest.

Nominal Rate

The interest rate before adjustments for inflation or other factors, often referred to as the stated or face interest rate.

Compounded Quarterly

A method of calculating interest where the accrued interest is added to the principal sum every quarter, thus increasing the base for the next interest calculation.