Question: 1 .The discussion surrounding noted that problems can arise in maintaining the same replacement ratio in a population in which the dependency ratio is growing. Suppose that instead of keeping the replacement ratio constant over time, the goal of public policy is to maintain a constant level of benefits. Explain how this changes ones views of the consequences of an increasing dependency ratio, especially if wages are increasing over time due to productivity gains.
2. Discuss: "Over the long term, the rate of return to stocks is greater than the rate of return to government bonds. Therefore, it would be easier to can for future retirees if the Social Security trust fund were invested in stocks rather than government bonds.