# ECO 450 Week 11 Final Exam Part 1

Jun 27th, 2016
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Question 1 3 out of 3 points A worker earns \$2,000 per month before taxes. He pays \$140 per month payroll tax on those wages. In addition, the income taxes on those wages are \$360 per month. On retirement, the worker receives a Social Security pension of \$750 per month. Which of the following statements is true? Answer a. The worker’s gross replacement rate is 50 percent. b. The worker’s net replacement rate is 50 percent. c. The worker’s net replacement rate is 38 percent. d. The worker’s net replacement rate is 75 percent. Question 2 3 out of 3 points The Social Security Act was implemented in the United States in: Answer a. 1927. b. 1935. c. 1947. d. 1965. Question 3 3 out of 3 points The gross replacement rate: a. measures a worker’s monthly retirement benefit divided by monthly earnings before taxes in the year prior to retirement. b. measures a worker’s monthly retirement benefit divided by monthly earnings after taxes in the year prior to retirement. c. is a

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ECO 450 Week 11 Final Exam Part 1Question 13 out of 3 pointsA worker earns \$2,000 per month before taxes. He pays \$140 per month payroll tax on thosewages. In addition, the income taxes on those wages are \$360 per month. On retirement, theworker receives a Social Security pension of \$750 per month. Which of the following statementsis true?Answera. The workers gross replacement rate is 50 percent.b. The workers net replacement rate is 50 percent.c. The workers net replacement rate is 38 percent.d. The workers net replacement rate is 75 percent.Question 23 out of 3 pointsThe Social Security Act was implemented in the United States in:Answera. 1927.b. 1935.c. 1947.d. 1965.Question 33 out of 3 pointsThe gross replacement rate:a. measures a workers monthly retirement benefit divided by monthly earnings before taxes inthe year prior to retirement.b. measures a workers monthly retirement benefit divided by monthly earnings after taxes in theyear prior to retirement.c. is an increasing function of gross monthly earnings prior to retirement.d. is independent of gross monthly earnings prior to retirement.AnswerQuestion 4Social Security tax rates can be reduced if:a. taxable wages decline.b. the retirement age is lowered.c. the retirement age is raised.d. the work force decreases in size.AnswerQuestion 5The Social Security retirement system:a. is a fully funded pension system.b. is a tax-financed system that pays benefits from

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