Assignment #1: Due Wed.

, September 15
Fall 2010 Macroeconomics – Econ 101
Westchester Community College
Wed. 6:00 – 8:40 PM
Prof. S. MacDonald

Read the two articles, “Attacking Social Security” by Paul Krugman and “Fixing Social Scecurity:The
‘low hanging fruit,” published by CNN. These two articles present a variety of views on how to ensure
the solvency of social security into the future. Then answer the following:

After having read the information and opinions presented in the two articles, answer the following
questions in a 1 and ½ - 2 page essay. Be sure to provide precise and clear answers, and provide
clear reasoning and examples to support your views. Please reference the articles by author or
title when you discuss them. Your answers/arguments may take the position of favoring or opposing
any of the proposed reforms discussed. Just be sure that your arguments are supported with
specifics and clear reasoning.

In your essay, address the following questions:

1. After having read the articles, identify the resources in our economy appear to be
increasingly scarce, and Explain why they are scarce.

2. Is it necessary to do anything to change the social security system as Paul Krugman

suggests in his article? Why or why not?

3. Will any of the proposed changes to the Social Security system discussed in the CNN
article effectively address the problems believed to be confronting the program, such as
insufficient funding expected in the near future? If so, how would they help? If not, explain
why.

4. If from your reading on this issue, you believe changes are necessary, are there other
reform policies not discussed here that you believe would be more effective in addressing
the problems facing social security? If so, discuss these and explain why you believe they
would be more effective.

5. Explain HOW you believe the proposals outlined in either of the articles would be (or
would not be) effective, equitable and efficient in addressing a possible scarcity of
funds to support social security and thus, in stabilizing the national economy?

6. Finally, what in your view would be the opportunity costs if nothing were done to
change the current system? What would be sacrificed? (Alternatively, what would
be the opportunity costs if a reform plan were enacted?) What would be sacrificed?