5 Canada Pension Plan is changing gradually from a payasyoug

(5) Canada Pension Plan is changing gradually from a \"pay-as-you-go\" plan toa hybrid structure (i.e., a mix of \"fully funded\" and \"pay-as-you-go\" plan). This change will reduce Canada\'s capital stock in the long-run. (a) True. (b) False.

Solution

5) Capital stock - real stock, or, capital goods already produced. These are non-financial assets used in the production of goods, and, services.

True

It does reduce the capital stock as investors are actively managing in the pay as you go option. In the second option, the funds are not available to employees. These cannot be used for the purchase of capital goods.

Pay as you go - Managed by individuals; it is possible for one to decide on the amount to be invested every month or at a regular interval of time. One gets a lump sum, or, annuity at the end of the term.

Fully Funded - Funds provided by the firm, individuals get fixed payouts, at the time of retirement, depending on the tenure of service.

2) (b) False

In case of convergence hypothesis, the countries can differ in their state ratios. These differ in consumption per capita, level variables, and, population growth rate

7) b) 8

Use the rule of 70

The number of years for a year to double = 70 / (annual percentage growth rate)

70/7 = 10

After 20 years, 4 times

After 30 years, 8 times the per capita income 30 years ago