Government expenditures (G): $160, $160, $160, $160, $160
Tax Revenues (T): $100, $120, $140, $160, $180
Real GDP: $500, $600, $700, $800, $900
A) What is the marginal tax rate?
The average tax rate?
Which of the following describes the tax system: proportional, progressive, regressive?
B) Suppose the above government is producing $600 of real GDP, whereas the potential real GDP (or full-employment real GDP) is $700. How large is its budget deficit?
Its cyclically adjusted budget deficit?
Its cyclically adjusted budget deficit as a percentage of potential real GDP?
Is the fiscal policy expansionary or is it contractionary?