Lalaland is an extremely stable country with 200,000 residents, half of whom are young workers and half
Question:
sector, which will gladly lend the Lalalandian government money, charging them 10% interest per year. Lalaland is considering moving to a system of personal accounts, where each Lalalander would take her $2,500 and invest it in Gogovian markets (and earn a much higher rate of return!). The government would borrow $250 million ($2,500 × 100,000) from Gogovian bankers to pay for current retirees. It would then tax retirees each year by just enough to pay the interest on this debt. Would this new system be better or worse for Lalaland?
Fantastic news! We've Found the answer you've been seeking!
Step by Step Answer:
Related Book For
Question Posted: