Questions On Problems And Applications

e. Workers: the workers were given less money when the prices of the goods decreased.

When the average MPC out of Social Security increases, the larger impact on the economy it will have due to that income being circulated through the economy. Typically, those who have lower-income will be more likely to spend more of their income than higher-income households. Also, we see that generally those who receive Social Security to in fact have a lower income, and that money is a large portion of that income. This will then lead them to have a higher than average MPC. These lower-income households will likely spend the income from Social Security on the daily necessities, which impacts a different segment of the economy rather than if it was spent on luxury or travel. Age is also a factor in Social Security as well as how it affects an individual’s MPC. Those who are older and have reached the point in time where they more likely to spend their assets rather than save, usually have a higher MPC than the public. This is where we can see that altering MPCs for the age of Social Security beneficiaries, as well as their income, would have an increased effect on the economy regarding Social Security payouts (Koenig, G. AARP., & Myles, A. Mississippi State University, 2013)

4. You are now familiar with government and how it plays a role in our economy. What are the advantages and disadvantages of governmental involvement? What changes would you make to improve government’s role?

1. On Market Failure – We said that the rationale for public policy is either market failure and/or government failure. Address the following with this rationale in mind:

2. The poorer you are, the worse your economic life has become over the past 30 years.

c. What is your determination regarding reducing the taxable amount of income for both (a) and (b) above?

Scenario 3: The nation is currently experiencing a period of rising prices. Inflation is making consumer goods increasingly difficult to afford as wages have remained constant.

Economic factors will play a role in baby boomers working beyond the age of 50. Due

Choose one of the three types of market failure and give a real world example of it. Do you believe the government has the ability to solve this problem?

The passing of the Social Security Act generated a social insurance program that protected a multiplicity of people by supplying a monthly benefit to societal individuals age 65 and older who were no longer actively working; it was a means of income to individuals once they retired and was based on the person’s payroll tax contribution (Martin & Weaver, 2005). The longer amount of years a person was employed, the higher their benefit amount is set to be. Social weighing was a method they used to guarantee that the lower earning people receive a respectively greater income than their past earnings. (DeWitt, 2010). Not long after the Social Security Act was passed, legislation had considerable amounts of amendments to the original Social Security Act of 1935, and in 1939 the notion of economic security became family based; which it was then modified in order to supplement benefits to the spouse or young children of a retired worker, also providing welfare to a household who lost the loved one that was a covered worker (King & Cecil, 2006). In addition, the Social Security amendments of 1939 altered the benefits to be given to earlier participants and not focusing on giving benefits to future members in the Social Security program, also causing the arrangement of welfare to be provided to families rather than just an individual (DeWitt, 2007). Social Security being emphasized as an insurance rather than a savings, and carrying payroll tax money into the future would have

d. Since this is a variable pay and not a permanent increase, it does not ensure a long term

Social Security has helped the elderly receive income during their retirement years, and has helped those who have disabilities from accidents and other disabilities to supplement their income sources. Social Security takes a portion of income from workers paychecks each month, and pay those individuals a retirement income based on when they elect to retire and receive this income. “This income makes up of more than half the retirement income of more than 75 percent of retired Americans,” and continues to help households with their daily living expenses by injecting funds back into the economy (Osterland, 2014).

The eligibility of social security requirements varies depending on the situation. The specific eligibility requirements for Social Security benefits depend on the type of benefits, the age of the person filing the claim and, if the person is a dependent or survivor. To first be able to qualify for social security benefits, the individual must have worked in jobs that are covered by Social Security. The individual will pay into the system over the amount of times that they were employed. This means that the worker must have earned enough of what Social Security calls "work credits" by the time he or she claims retirement benefits. To be qualified for full retirement benefits, the individual must be in between the ages of 62 and 70 to start

Market failure is a situation where pure market forces such as the operation of the price mechanism fail to produce goods at a socially optimum level. In Australia’s mixed market economy, government intervenes to correct market failures. This can lead to environmental efficiency, productivity, additional revenue and employment however it can also reduce consumer welfare and cause government failure.

Social Security is the main way elders receive their income. This started in 1935, and in 2005, the average social security income for a man was almost $350 over the poverty level, and even less for a woman (Ferrini). In 2015, over 59 million Americans will receive almost $870 billion in Social Security benefits (Social Security Administration). I think social security is a great way for elderly to receive money. However, a lot of time