Suppose a pay-as-you-go social security system where social security is funded by a proportional tax on the income of the young. That is, the tax collected by the government is yy, where y is the tax rate and y is income of the young. Retirement benefits are given out as a fixed amount b to each old consumer.
Suppose a pay-as-you-go social security system where social security is funded by a proportional tax on the income of the young. That is, the tax collected by the government is yy, where y is the tax rate and y is income of the young. Retirement benefits are given out as a fixed amount b to each old consumer.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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