STAYER ECO 450 Week 11 Final Exam
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( Many other Questions are also Included) 1. The Social Security pension system is a fully funded retirement plan. 2. Social Security pension benefits are transfers from workers to retirees. 3. Social Security pensions are financed by voluntary contributions by workers.
4. The gross replacement rate measures the ratio of taxes paid per year by workers to their annual Social Security pension when they retire.
5. In the year prior to retirement, a worker earned $ 20,000 and paid $ 5,000 in taxes on those earnings. His annual Social Security pension is $ 10,000 per year. Then it follows that his net replacement rate is 50 percent.
6. The gross replacement rate for Social Security pensions is the same for all workers independent of their preretirement earnings.
7. The annual growth in wages subject to Social Security taxes is 3 percent. Given the payroll tax rate, the growth in funds available to pay pension benefits is also 3 percent.