Home Ownership — Cumulative exam

Question 145 • Financial Math - MA2007

Which of the following statements accurately describes the result of a decreasing worker-per-beneficiary ratio in the Social Security system?

Answer

Fewer taxed workers than beneficiaries means that the system is collecting more money for the money being drawn out. This leaves money in the system and secures benefits for future beneficiaries.

Fewer taxed workers than beneficiaries means that the system is collecting more money for the money being drawn out. This leaves a shortage of money in the system making benefits for future beneficiaries unsure.

Fewer taxed workers than beneficiaries means that more money is being drawn from the system for the money put in. This leaves a shortage of money in the system making benefits for future beneficiaries unsure.

Fewer taxed workers than beneficiaries means that more money is being drawn from the system for the money put in. This leaves money in the system and secures benefits for future beneficiaries.

Explanation

Social Security is mainly funded by taxes paid by current workers and uses that revenue to pay benefits to current beneficiaries. When there are fewer taxed workers per beneficiary, less money is collected relative to the amount being paid out, creating a shortage that can make future benefits uncertain. This matches choice C.

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