Refer to the accompanying table for Waxwania: LO2 , LO3

a. What is the marginal tax rate in Waxwania? The average tax rate? Which of the following describes the tax system:
proportional, progressive, regressive?

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? Is Waxwania’s fiscal policy expansionary or is it contractionary?

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Government Expenditures, G Tax Revenues, T Real GDP $160 $100 $500 160 160 160 120 600 140 700 160 660 160 800 180 900