Question

The Social Security program is designed to pay

• older current workers, using funds from younger current workers.

• current retirees, using funds from their past contributions.

• current retirees, using funds from current contributions.

• the lower-income groups, using funds collected from high-income groups.

What is a secondary market for mortgages?

• A market in which banks that issued mortgages to home buyers sell those mortgages to other investment companies.

• None of the above is correct.

• A market in which high-risk, low-income borrowers can obtain loans to buy homes.

• A market dedicated exclusively to mortgages for used homes as opposed to new homes.

• A market for mortgages in which interest rates tend to be very low.

Answer 1

A) Ans.: current retirees using funds from their past contributions.

Social security is paid by Federal government to old age (retirees), disabled and poor with inadequate or no income. The fund is majorly sourced from a dedicated payroll tax which working people are to pay. So it is basically something you pay/contribute to in present, to benefit from it after retirement.

B) Ans.:A market in which banks that issued mortgages to home buyers sell those mortgages to other investment companies.

When a bank issues mortgage, it often sells the mortgage into seconday mortgage markets to investment companies like pension funds, insurance companies, etc, to buy mortgage-backed-securities which are highly liquid. This liquid asset also provide banks with money to further lend and issue mortgages.