Question

Moral hazard with Social Security O does not exist because the Social Security program is not means-tested O arises because Social Security may lead people to retire at different times than they would in the absence of Social Security. is counterbalanced by the adverse selection effect in Social Security. arises because the Social Security benefits you receive in retirement are not a function of your pre-retirement O o earnings. None of the above. Question 15 1 pts The consumption-smoothing benefits associated with unemployment insurance arise because O the program taxes people who are working and uses the revenues to provide them with cash assistance if they lose their jobs through no fault of their own. O the marginal utility of income for people who are unemployed is lower than the marginal utility of income for people who are working. unemployment insurance provides in-kind benefits instead of cash benefits. All of the above. None of the above. O

Answer 1

1. Answer is 'B',

The moral hazard with social security "arises because social security may lead peole to retire at different times than they would in the absence of social security".

2.Answer is 'A',

The consumption smoothing benefits associated with unemployment arises because, "the program taxes people who are working and uses the revenues to provide them with cash assistance if they lose their jobs through no fault of their own".