Assume that taxes depend on income and the MPC is 0.8 and tis 0.4. An increase in taxes of $10 billion will decrease equilibrium income by Select one: O a. $15.4 billion. O b. $25 billion. O c. $19.2 billion. O d. $27 billion.

Figure 4-11 LAFFER CURVE 100 C. A Tax Revenue Tax Rate (percent)

Refer to the accompanying table for Waxwania.  Government Expenditures, G Tax Revenues, T Real GDP $190 100 $500 190 120 600 190 140 700 190 160 800 190 180 900 a. What is the marginal tax rate in Waxwania?  ____percent       --The average tax rate?  _____percent         b. Suppose Waxwania 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?________ percent

Which statement is CORRECT? A) Automatic stabilizers indicate deliberate action by policy makers. O B) Discretionary fiscal policy shows automatic adjustments without any specific effort by policy makers. C) Discretionary fiscal policy indicates deliberate action by policy makers. Automatic stabilizers are risky tó use and sometimes can get the economy D) destabilized.

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Assume that MPS is 0.4. If spending increases by $8 billion, then real GDP will increase by Multiple Choice O O O O $15 billion. $20 billion. $13.3 billion. $8 billion.

What would happen to output, employment, and the price level if the government increased spending on infrastructure, ceteris paribus? O Output would decrease, employment would decrease, and the price level would decrease O Output would decrease, employment would decrease, and the price level would increase O Output would decrease, employment would increase, and the price level would increase Output would increase, employment would increase, and the price level would decrease. O Output would increase, employment would increase, and the price level would increase Question 2(Multiple Choice Worth 5 points) (03.06 MC) Assume the price level is increasing, real GDP is decreasing, and the unemployment rate is increasing. Which event would explain this macroeconomic situation? OA positive supply shock OA negative supply shock A positive demand shock OA negative demand shock O insufficient data

D₂ Which of the following movements would be consistent with the government budget going from deficit to surplus and the simultaneous enactment of an investment tax credit? O a movement from Point A to Point C a movement from Point B to Point A O a movement from Point B to Point F a movement from Point C to Point B

In the United States, from the most recent fiscal data we reviewed in class, total government spending is roughly 39% of GDP; yet, using the expenditure method for calculating GDP, government expenditures on goods and services were only 17% of GDP. Which of the following most likely explains the difference? Select one: O a. Transfer payments are included in the second figure, but not the first one. O b. Transfer payments are included in the first figure, but not the second one. O c. Military (i.e. defense) spending on goods and services is included in the second figure, but not the first one. O d. Military (i.e. defense) spending on goods and services is included in the first figure, but not the second one.

The percentage of an increase in income that is taxed is: O a regressive tax. O the marginal tax rate. O the average tax rate. O a flat tax.