Question

According to current projections, Social Security and other entitlement programs will soon be severely underfunded. If...

According to current projections, Social Security and other entitlement programs will soon be severely underfunded. If the government decides to cut social security benefits to future retirees and raise Social Security taxes on all workers, what will probably happen to the supply of funds available to the capital markets? What will be the effect on interest rates?

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

The reduction in social security benefits to future retirees will lead to a reduction in consumption. The increment in social security taxes will reduce the savings of the individuals. Therefore, the government's decision will lead to a reduction in the lessor disposable income to the individuals. The individuals would focus on saving the money to offset the future drop in benefits.

The savings would lead to an increase in the supply of loanable funds in the market. The increase of supply in the loanable funds would reduce the interest rate.

*Please take your valuable time and rate the solution as per your convenience.*

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
exam3 #12 CBO expects higher​ long-term deficits The Congressional Budget Office​ (CBO) says the national debt...
exam3 #12 CBO expects higher​ long-term deficits The Congressional Budget Office​ (CBO) says the national debt is on an upward path and will hit 122 percent of GDP in 2040. Healthcare programs and Social Security benefits are the large drivers of spending over the coming decades. ​Source: The Wall Street Journal​, July​ 12, 2016 If the government decided to slow the growth of debt by cutting transfer payments and raising taxes by the same​ amount, how would this fiscal policy...
1. The Federal Reserve Act says that the Fed must try to achieve​ ______. A. a...
1. The Federal Reserve Act says that the Fed must try to achieve​ ______. A. a balanced budget B. maximum​ employment, stable​ prices, and moderate​ long-term interest rates C. a stable U.S. dollar on foreign exchange markets and moderate​ long-term and​ short-term interest rates D. an economic environment in which investment in U.S. stock and money markets is encouraged The Federal Reserve Act says that the Fed must use​ ______ to achieve its objectives. A. bank reserves B. commercial banks...
1. All of the following programs are considered mandatory spending EXCEPT: interest on national debt. Medicare....
1. All of the following programs are considered mandatory spending EXCEPT: interest on national debt. Medicare. Social Security. national defense. 2. What did Arthur Laffer suggest President Reagan do in the 1980s? increase welfare benefits increase corporate taxes increase income taxes decrease income taxes 3. A type of money made from a substance that is also valuable is called: economic money. fiat money. commodity money. metallic money. 4. What are the two common measures of the money supply in use...
Four Case Studies on Corporate Social Responsibility: Do Conflict Affect a Company's Corporate Social Responsibility: Apple...
Four Case Studies on Corporate Social Responsibility: Do Conflict Affect a Company's Corporate Social Responsibility: Apple Inc. Apple’s profile Apple Inc. (hereafter Apple) was established in 1977 and is registered on the NASDAQ Global Select Market exchange. According to its Form 10-K ‘Apple designs, manufactures and markets mobile communications, media devices, personal computers and portable digital music players, and sells a variety of related software, services, peripherals, networking solutions, and third-party digital content and applications’. Its products are sold through...
Whatever It Takes: How the Fed Aims to Rescue the Economy The central bank is using...
Whatever It Takes: How the Fed Aims to Rescue the Economy The central bank is using tactics from the last financial crisis and deploying new ones to keep money flowing. Here are the basics. The Federal Reserve, under Jerome H. Powell, is moving to shore up the American economy during the coronavirus pandemic. Credit...Yuri Gripas/Reuters By Ben Casselman March 23, 2020 The Federal Reserve on Monday pledged to do, in essence, whatever it takes to keep the economy from collapsing...
Ben and Chris combined their love of hockey with a business venture. They purchased a small...
Ben and Chris combined their love of hockey with a business venture. They purchased a small portable cart and began selling hockey memorabilia outside of the hometown hockey arena. Their first year went well, but this past year has been a real struggle. Due to poor economic conditions including a loss of jobs, ticket sales at the arena are down, which has significantly hurt their sales as well. As a recent business school graduate, you explain to Ben and Chris:...
2. SECURING THE WORKFORCE Diversity management in X-tech, a Japanese organisation This case is intended to...
2. SECURING THE WORKFORCE Diversity management in X-tech, a Japanese organisation This case is intended to be used as a basis for class discussion rather than as an illustration of the effective or ineffective handling of an administrative situation. The name of the company is disguised. INTRODUCTION In light of demographic concerns, in 2012, the Japanese government initiated an effort to change the work environment in order to secure the workforce of the future. Japan is world renowned for its...
Exploring Innovation in Action Power to the People – Lifeline Energy Trevor Baylis was quite a...
Exploring Innovation in Action Power to the People – Lifeline Energy Trevor Baylis was quite a swimmer in his youth, representing Britain at the age of 15. So it wasn’t entirely surprising that he ended up working for a swimming pool firm in Surrey before setting up his own company. He continued his swimming passion – working as a part-time TV stuntman doing underwater feats – but also followed an interest in inventing things. One of the projects he began...
Mattel Responds to Ethical Challenges Business Ethics This case was written by Debbie Thorne, John Fraedrich,...
Mattel Responds to Ethical Challenges Business Ethics This case was written by Debbie Thorne, John Fraedrich, O. C. Ferrell, and Jennifer Jackson, with the editorial assistance of Jennifer Sawayda. This case was developed for classroom discussion rather than to illustrate either effective or ineffective handling of an administrative, ethical, or legal discussion by management. All sources used for this case were obtained through publicly available material. Mattel, Inc. is a world leader in the design, manufacture, and marketing of family...
Sign In INNOVATION Deep Change: How Operational Innovation Can Transform Your Company by Michael Hammer From...
Sign In INNOVATION Deep Change: How Operational Innovation Can Transform Your Company by Michael Hammer From the April 2004 Issue Save Share 8.95 In 1991, Progressive Insurance, an automobile insurer based in Mayfield Village, Ohio, had approximately $1.3 billion in sales. By 2002, that figure had grown to $9.5 billion. What fashionable strategies did Progressive employ to achieve sevenfold growth in just over a decade? Was it positioned in a high-growth industry? Hardly. Auto insurance is a mature, 100-year-old industry...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT