5) The problem of having twin deficits refers to

A) a decrease in the government's budget deficit.

B) a decrease in domestic investment and an increase in the deficit on the capital account.

C) an increase in the government's budget deficit and an increase in the deficit on the current

account.

D) an increase in the government's budget deficit and an increase in private sector borrowing.

E) an increase in private saving and a decrease in the capital account.

The twin deficits can be reduced most directly by pursuing

A) expansionary fiscal policy.

B) contractionary monetary policy.

C) expansionary fiscal and monetary policies simultaneously.

D) expansionary monetary policy.

E) contractionary fiscal policy.

(8 points) The municipality of ABC sponsors a defined benefit pension plan with the following provisions: Employee contributions 50% of normal cost Normal retirement age 62 Benefit formula 2% of final average pay times years of service Cost of living adjustment (COLA) |Automatic 3% per year (a) (2 points) Describe how the current plan design shares risk between ABC and the following groups: (i) Employees (ii) Retirees ABC is struggling with the volatility of contributions. To further share risk with participants, ABC changed the COLA provision to be equal to inflation with a 4% annual cap. (b) (2 points) Critique the effectiveness of this change. (c) (4 points) Propose four benefit provision changes that would further share risk with participants based on risk sharing provisions implemented by other public plans in the U.S. Justify your response.(a) (4 points) Compare and contrast annuity buy-ins and annuity buy-outs from the following perspectives: (i) Plan sponsor Plan participants (b) (4 points) Compare and contrast the accounting implications under International Accounting Standards IAS 19, Rev 2011 versus U.S. Accounting Standards ASC 715 of the following transactions: (i) Annuity buy-in (ii) Annuity buy-out No calculations required.(a) (4 points) Describe advantages and disadvantages of offering globally mobile workers an International Pension Plan instead of participating in various local plans from the perspectives of: (i) Employer (ii) Employee (b) (2 points) Explain how the disadvantages from the employer perspective identified in part (a) can be addressed.(a) (4 points) Describe four risks facing sponsors of post-retirement benefit plans. Company ABC has amended its post-retirement benefits plan so that only retirees prior to January 1, 2021 are eligible for subsidized benefits. (b) (I point) Explain how future retirees can manage the risk of unexpected healthcare costs. (c) (2 points) Propose two ways that Company ABC can help future retirees manage their future healthcare expenses. Justify your response