CASE STUDY

Number Two: Social Security

There is no such thing as a Social Security[7]savings account. Social Security takes in enough taxes today to remain viable until 2017 (depending on who you speak with and on what day). Unfortunately, these funds are not in a piggy-bank. They are invested in special government securities (IOUs). The borrower (the U.S. federal government), according to both former Secretary of the Treasury Paul O'Neil and now Comptroller General David Walker of the Government Accountability Office (GAO), is in serious financial difficulty that needs to be addressed immediately. Walker has said it is necessary to balance the budget within the next five years, make a down payment on the $50 trillion imbalance, and begin reforming government programs. "Time," he said, "is working against us.Number Two: Social Security

There is no such thing as a Social Security[7]savings account. Social Security takes in enough taxes today to remain viable until 2017 (depending on who you speak with and on what day). Unfortunately, these funds are not in a piggy-bank. They are invested in special government securities (IOUs). The borrower (the U.S. federal government), according to both former Secretary of the Treasury Paul O'Neil and now Comptroller General David Walker of the Government Accountability Office (GAO), is in serious financial difficulty that needs to be addressed immediately. Walker has said it is necessary to balance the budget within the next five years, make a down payment on the $50 trillion imbalance, and begin reforming government programs. "Time," he said, "is working against us.

Question four.

1. The two basic markets shown by the simple circular flow model are:

2. Which of the following is a limitation of the simple circular flow model?

3. In economics the central problem is:

4. Macroeconomics deals with:

5. Microeconomics is not concerned with the behavior of

6. The total demand for goods and services in an economy is known as:

7. . Unemployment means that:

8. Opportunity cost is

9. The circular flow of goods and incomes shows the relationship between

10. In a planned or command economy, all the economic decisions are taken by the: