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... Say the Fed announces that the Reserve Ratio for all banks is 0.2 Banks are mandated to hold 20% of all new deposits in reserve to manipulate the money supply The other 80% will be taken and loaned out or withdrawn and will become deposits in other banks or used for consumption ...
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... ____12. The preferred dividend coverage ratio and the times interest earned ratio both express "margin of safety" relationships with respect to the firm's ability to cover fixed expenses. ____13. Financial leverage works to a firm's advantage if the firm can earn a higher ROI on borrowed funds than ...
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... went with management in 92% of cases, with 7% opposition and 1% abstentions. Future plans Our three-yearly independent in-depth actuarial review estimated that at 31 December 2006, our clergy pension liabilities stood at £1,741 million, representing 33.0% of the fund. Our actuaries advised that the ...
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... • long-term (liabilities, debt, obligations): maturing over or after a relatively long period of time/ μακροπρόθεσμη οφειλή • short-term (liabilities, etc.): maturing over a relatively short period of time/ βραχυπρόθεσμα χρέη • securities: the financial asset represented by a certificate carrying th ...
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... 9. “Wal-Mart is a low-wage firm and this indicates that it exploits its workers.” Which of the following should cause one to question the validity of this statement? a. The high profits of Wal-Mart. b. The large sales revenue of Wal-Mart. c. No one is required to work for Wal-Mart and, therefore, i ...
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... The key issue here is the balance between incentives and insurance in the design of a social safety net. The ultimate reason for such arrangements is the insurance they provide for individuals. However, such insurance may distort incentives, and there is thus a non-trivial question of how to strike ...
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... In Chapter 2, 3, and 4, we usually takes the rate of return, yield rate, or yield to maturity as given and compute some other quantities such as the present value of the cash–flow, the size(s) of payments, and the number of payments. In the reality, it is common that we know everything but the inter ...
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... production and employment) each of them is subject to the multiplier principle as well: any initial change in spending shifts the aggregate demand curve by a multiple amount. An “automatic stabilizer” can be thought of as any factor that reduces the size of this multiplier effect. Consider the follo ...
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greek economic crisis and the public sector - E

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Pensions crisis

The pensions crisis is a predicted difficulty in paying for corporate, state, and federal pensions in the United States and Europe, due to a difference between pension obligations and the resources set aside to fund them. Shifting demographics are causing a lower ratio of workers per retiree; contributing factors include retirees living longer (increasing the relative number of retirees), and lower birth rates (decreasing the relative number of workers, especially relative to the Post-WW2 Baby Boom). There is significant debate regarding the magnitude and importance of the problem, as well as the solutions.For example, as of 2008, the estimates for the underfunding of U.S. states' pension programs range from $1 trillion using the discount rate of 8% to $3.23 trillion using U.S. Treasury bond yields as the discount rate. The present value of unfunded obligations under Social Security as of August 2010 was approximately $5.4 trillion. In other words, this amount would have to be set aside today such that the principal and interest would cover the program's shortfall between tax revenues and payouts over the next 75 years.Some economists question the concept of funding, and, therefore underfunding. Storing funds by governments, in the form of fiat currencies, is the functional equivalent of storing a collection of their own IOUs. They will be equally inflationary to newly written ones when they do come to be used.Reform ideas are in three primary categories: a) Addressing the worker-retiree ratio, via raising the retirement age, employment policy and immigration policy; b) Reducing obligations via shifting from defined benefit to defined contribution pension types and reducing future payment amounts (by, for example, adjusting the formula that determines the level of benefits); and c) Increasing resources to fund pensions via increasing contribution rates and raising taxes.
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