The System of Social Security Is Based on Young Working

question 18

Multiple Choice

The system of Social Security is based on young working people paying taxes to support older retired people.The dependency ratio is the number of workers to retirees.Forty years ago it was 16 workers for every one retiree.What will happen to this ratio by the year 2048?

• A)It will reverse so that there will be more retirees than workers.
• B)It will increase,because there will be more young workers than retirees.
• C)It will decline to 2 workers for every 1 retiree.
• D)Nothing,since the ratio of young people to old people does not change.

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Definitions:

WACC

Weighted Average Cost of Capital; a calculation of a firm's cost of capital in which each category of capital is proportionately weighted.

Return on Assets

A financial ratio indicating how profitable a company is relative to its total assets, used to assess how efficiently a company uses its assets to generate earnings.

Total Equity

The total net value of a company, calculated as total assets minus total liabilities, representing ownership value in the company.

Tax Rate

The specific percentage of revenue taxed by the government from both businesses and private individuals.