Refer to the accompanying table for Waxwania. a. What is the marginal tax rate i

Question

Refer to the accompanying table for Waxwania.

a. What is the marginal tax rate in Waxwania?  percent

The average tax rate?  percent

Which of the following describes the tax system: proportional, progressive, regressive? (Click to select)RegressiveProgressiveProportional

b. Suppose Waxwania is producing $650 of real GDP, whereas the potential real GDP (or full-employment real GDP) is $750.

How large is its budget deficit? $

Its cyclically adjusted budget deficit? $

Its cyclically adjusted budget deficit as a percentage of potential real GDP?

Instructions: Round your answer to two decimal places.

percent

Is Waxwanias fiscal policy expansionary or is it contractionary? (Click to select)ContractionaryExpansionary

Refer to the accompanying table for Waxwania. a. What is the marginal tax rate in Waxwania? percent The average tax rate? percent Which of the following describes the tax system: proportional, progressive, regressive? (Click to select)RegressiveProgressiveProportional b. Suppose Waxwania is producing $650 of real GDP, whereas the potential real GDP (or full-employment real GDP) is $750. How large is its budget deficit? $ Its cyclically adjusted budget deficit? $ Its cyclically adjusted budget deficit as a percentage of potential real GDP? Instructions: Round your answer to two decimal places. percent Is Waxwanias fiscal policy expansionary or is it contractionary? (Click to select)ContractionaryExpansionary

Explanation / Answer

a)

marginal tax rate = 20/100 = 20%

average rate = 110/550 = 20%

proportional

b)

budget deficit = 160-130 = $30 billion

Its cyclically adjusted budget deficit = 160 -150 = $10 billion

Its cyclically adjusted budget deficit as a percentage of potential real GDP = 10/750 = 1.333 %

the fiscal policy is a expansionary.

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