Congress would like to increase tax revenues by 8 percent. Assume that the average taxpayer in the United States earns $43,000 and pays an average tax rate of 30 percent.

Average tax rate

%

a. If the income effect is in effect for all taxpayers, what average tax rate will result in a 8 percent increase in tax revenues? (Round your answer to 2 decimal places.)

b. This is an example of what type of forecasting?

• Static

• Dynamic