Discuss: “Over the long term, the rate of return to stocks is greater than the rate of return to government bonds. Therefore, it would be easier to care for future retirees if the Social Security trust fund were invested in stocks rather than government bonds.”
Answer to relevant QuestionsConsider a model in which an individual lives only two periods. The individual has diminishing marginal utility of consumption and receives an income of $ 20,000 in period 1 and an income of $ 5,000 in period 2. The private ...Suppose there are only two people, Simon and Charity, who must split a fixed income of $ 100. For Simon, the marginal utility of income is MUs = 400 -2Is whereas for Charity, marginal utility is MUc =400 -6Ic where I c , I s ...Sherry’s utility is US and her income is YS. Marsha’s utility is UM and her income is YM. Suppose it is the case that: Define the Pareto efficient redistribution, and explain why the concept is relevant in this ...Consider Eleanor, who qualifies for the earned income tax credit as depicted in Figure 13.8. Suppose that Eleanor can earn $ 8 per hour. Taking into account the EITC and ignoring other aspects of the tax and transfer ...Suppose that the income tax in a certain nation is computed as a flat rate of 5 percent, but no tax is levied above $ 50,000 in taxable income. Taxable income, in turn, is computed as the individual’s income minus $ ...
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