2. Refer to the accompanying table for Waxwania:

LO2, LO3

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

b. Suppose Waxwania is porducing $600 fo er al 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?