Suppose the federal budget is balanced but that automatic stabilizers increase tax revenues by $50 billion per year and decrease transfer payments (e.g., welfare, unemployment benefits) by $10 billion per year for every 1 percentage point change in the real GDP growth. Using this information, complete the following table:
|
Change in GDP Growth Rate
|
Change in Tax Revenue
|
Change in Transfer Payments
|
Change in Budget Balance
|
|
-2%
|
$ billion
|
$ billion
|
$ billion
|
|
+1%
|
$ billion
|
$ billion
|
$ billion
|
|
+3%
|
$ billion
|
$ billion
|
$billion
|