3. The Social Security system levies a tax on workers and pays benefits to the elderly. Suppose...

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3. The Social Security system levies a tax on workers and pays benefits to the elderly.

Suppose that Congress increases both the tax and the benefits. For simplicity, assume that Congress announces that the increases will last for one year only.

a. How do you suppose this change would affect the economy? (Hint: Think about the marginal propensities to consume of the young and the old.)

b. Does your answer depend on whether generations are altruistically linked?

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Macroeconomics

ISBN: 9781429218870

7th Edition

Authors: N. Gregory Mankiw

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Question Posted: Sep 27, 2024 09:00 AM

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3. The Social Security system levies a tax on workers and pays benefits to the elderly. Suppose...

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Macroeconomics

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