If the U.S. economy grew rapidly in the future, would this eliminate the long run deficit of Social Security?
A) No; future Social Security benefits are tied to nominal wages and therefore increases in real incomes will also increase the future retirement benefits.
B) Yes; a rapid real growth rate would increase tax revenues without increasing the real benefit levels of future recipients.
C) Yes, more rapid growth would lead to inflation and this would help eliminate the system's long run deficit.
D) Yes, but only if the rapid growth led to a substantial increase in net exports.

Question

Quizplus · Accepted Answer

Social Security benefits are indexed to wages, so if the economy grows and wages increase, future benefits will also rise, potentially maintaining or even increasing the deficit.

If the US Economy Grew Rapidly in the Future, Would This Eliminate