The Pay-As-You-Go Nature of the Social Security System Means That

question 29

Multiple Choice

The pay-as-you-go nature of the Social Security system means that _____.

• A)current beneficiaries are paid out of general tax revenues
• B)current beneficiaries are paid out of the payroll taxes levied on current workers
• C)current beneficiaries are paid based on contributions made during their last five working years
• D)current beneficiaries are paid out of current earnings on the Social Security trust fund

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Definitions:

Incremental Annual

Incremental annual refers to the year-over-year changes or additional amounts in revenue, cost, or other financial metrics.

Internal Rate

Typically refers to the internal rate of return (IRR), which is the discount rate that makes the net present value (NPV) of all cash flows from a particular project equal to zero.

Discount Rate

A discount rate employed to ascertain the present worth of future cash flows within discounted cash flow analysis.

Net Present Value

The difference between the present value of cash inflows and the present value of cash outflows over a period of time, used in capital budgeting to analyze the profitability of an investment or project.