Refer to the accompanying table for Waxwania.
1. a. What is the marginal tax rate in Waxwania?
b. What is the average tax rate?
c. Which of the following describes the tax system: proportional, progressive, regressive?
2. Suppose Waxwania is producing $650 of real GDP, whereas the potential real GDP (or full-employment real GDP) is $750.
a. How large is its budget deficit?
b. What is its cyclically adjusted budget deficit?
c. What is its cyclically adjusted budget deficit as a percentage of potential real GDP?
d. Is Waxwania's fiscal policy expansionary or is it contractionary?
Refer to the accompanying table for Waxwania.
1. a. What is the marginal tax rate in Waxwania?
b. What is the average tax rate?
c. Which of the following describes the tax system: proportional, progressive, regressive?
2. Suppose Waxwania is producing $650 of real GDP, whereas the potential real GDP (or full-employment real GDP) is $750.
a. How large is its budget deficit?
b. What is its cyclically adjusted budget deficit?
c. What is its cyclically adjusted budget deficit as a percentage of potential real GDP?
d. Is Waxwania's fiscal policy expansionary or is it contractionary?
Related textbook solutions
Related questions
Refer to the following table for Waxwania (a hypothetical country):
What is the marginal tax rate in Waxwania? The average tax rate? Show your work. Which of the following describes the tax system: proportional, progressive, regressive?
|
Government Expenditures, G |
Tax Revenues, T |
Real GDP |
|
$160 |
$100 |
$500 |
|
$160 |
$120 |
$600 |
|
$160 |
$140 |
$700 |
|
$160 |
$160 |
$800 |
|
$160 |
$180 |
$900 |
Refer to the table given below. Suppose that aggregate demand increases such that the amount of real output demanded rises by $15 billion at each price level.
|
Real Output Demanded (Original) |
Price |
Real Output |
|
$500 |
112 |
$515 |
|
505 |
106 |
512 |
|
510 |
100 |
510 |
|
515 |
94 |
507 |
|
520 |
88 |
500 |
a.) By what percentage will the price level increase? _______ percent
b.) Will this inflation be demand-pull inflation or will it be cost-push inflation? (Click to select) Cost-push inflation or Demand-pull inflation
c.) If potential real GDP (that is, full-employment GDP) is $510 billion, what will be the size of the positive GDP gap after the change in aggregate demand? $ _______ billion
d.) If the government wants to use fiscal policy to counter the resulting inflation without changing tax rates, would it increase government spending or decrease it? (Click to select) (Increase or Decrease)
