Ask Question
BusinessBusiness
30 August, 22:13

Consider an overlapping generation set up with pay-as-you-go social security system in a hypothetical economy. There are 100 old retirees and 103 young workers at the current period. Old retirees earned $1,000 each when they were young. Young workers now earn $1,040 each. Suppose that the population growth is constant and there is a fixed payroll tax of 15%, which is used to finance the pay-as-you-go social security system. (a) what is the population growth rate, n? (b) How much is the total contribution of young workers to the social security system in the current period? (c) How much each retiree can receive from the social security system? (d) How much was the contribution of each old retiree when he or she was young? (e) What is the implicit return on the social security system?

+3
Answers (1)
  1. 30 August, 23:34
    0
    a) 3%

    b) the new workers contribute 16,068 dollars

    c) $160.68 each

    d) the old workers contribute 15,000 when they made his contribution

    e) rate of return 7.12%

    Explanation:

    growth rate: the increase in the workforce:

    103 new workers / 100 retired - 1 = 0.03 = 3%

    103 workers x 1,040 each x 15% = 16,068

    assuming no other employee:

    $16,068 pension fund / 100 retired persons = 160.68 dollars each

    100 workers x 1,000 each x 15% = 15,000

    e) the old retire contribute:

    1,000 x 15% = 150

    they receive 160.68

    rate of return:

    160.68 / 150 - 1 = 0.0712
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “Consider an overlapping generation set up with pay-as-you-go social security system in a hypothetical economy. There are 100 old retirees ...” in 📘 Business if you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.
Search for Other Answers
You Might be Interested in
Creswell Corporation's fixed monthly expenses are $25,000 and its contribution margin ratio is 67%. Assuming that the fixed monthly expenses do not change, what is the best estimate of the company's net operating income in a month when sales are
Answers (2)
Choose the best statement for the body of a cover letter. a. I presented marketing techniques, produced a final marketing portfolio, and wrote biweekly research papers. b.
Answers (1)
Banks are able to create money only when a. interest rates are above 2%. b. the fed sells u. s. government bonds. c. the reserve ratio is 100%. d. only a fraction of deposits are held in reserve.
Answers (1)
A company has the following balances in its asset accounts: Cash, $750; Accounts Receivable, $125; Equipment, $2,000; Supplies, $875. The amount of the company's total assets is A. $875. B. $1,750. C. $2,875. D. $3,750.
Answers (1)
Using the data calculate the balance on current account for this economy. The value of the current account is: $___ Round your solution to the nearest whole number and be sure to include a negative sign if necessary Current Account Value Balance
Answers (1)
New Questions in Business
A (n) is the issuer's written promise to pay an amount equaling the par value. The par value is paid at a specified future date. Most often, the issuer is required to make semiannual interest payments.
Answers (1)
The primary goal of the Consumer Financial Protection Bureau is: A To monitor your credit report and ensure your identity and other sensitive data has not been compromised. B To protect against abusive or deceptive debt collection purposes.
Answers (1)
Jake Skinner purchases a big screen TV on credit and will repay the loan with one payment at the end of 90 days. What type of credit did Jake use?
Answers (1)
Which most likely results from producers engaging in specialization? Producers reduce their costs. Producers increase their market share. Producers decrease the materials needed for production. Producers always offer more competitive pricing.
Answers (1)
The workers at State Hospital, a public sector employer, and Acme Inc, a private employer, are subject to speech censorship and arbitrary job termination. Constitutional issues are present only for the State Hospital workers. TrueFalse
Answers (1)
Home » Business » Consider an overlapping generation set up with pay-as-you-go social security system in a hypothetical economy. There are 100 old retirees and 103 young workers at the current period. Old retirees earned $1,000 each when they were young.
Sign Up Forgot Password?