Which of the Following Is Equivalent to Reforming the Social

question 36

Multiple Choice

Which of the following is equivalent to reforming the social insurance system to one of worker self-insurance?

• A) mandating that all insurance be fully experience-rated at the firm level
• B) mandating that workers contribute a portion of their income to a savings account that could be tapped if they have an adverse event
• C) eliminating the current insurance programs and mandating nothing to replace them
• D) mandating that all firms provide access to insurance for workers in the event of disability or unemployment.

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Definitions:

Distortionary Tax

A tax that causes people to alter their behavior and economic decisions from what they would have chosen in the absence of the tax.

Principle of Neutrality

The concept that certain measures, such as fiscal policies, should be designed to have a neutral effect on economic choices and competition.

Economic Decisions

Choices made by individuals, businesses, or governments regarding the allocation of scarce resources to satisfy needs and desires.

Excess Burden

The loss of economic efficiency that occurs when a tax or government policy distorts consumer behavior or market outcomes, leading to a decrease in total welfare.