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. Suppose that for every 1 percentage point increase (decrease) in GDP growth, automatic stabilizers (i) increase (decrease) tax revenues revenues by $90 billion and (ii) decrease (increase) transfer payments by $30 billion. Using this information, complete the table. LO4 Change in Transfer Change in Budget Change in Tax Revenue (billions) Change in GDP Payments Balance Growth Rate (billions) (billions) -2% +1% +3%

. Suppose that for every 1 percentage point increase (decrease) in GDP growth, automatic stabilizers (i) increase (decrease) tax revenues revenues by $90 billion and (ii) decrease (increase) transfer payments by $30 billion. Using this information, complete the table. LO4 Change in Transfer Change in Budget Change in Tax Revenue (billions) Change in GDP Payments Balance Growth Rate (billions) (billions) -2% +1% +3%

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
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Suppose that for every 1 percentage point increase (decrease) in GDP growth, automatic stabilizers

(i) increase (decrease) tax revenues revenues by $90 billion and

(ii) decrease (increase) transfer payments by $30 billion.

Using this information, complete the table. 

**Transcription for Educational Website:** --- **Understanding Automatic Stabilizers and GDP Growth** **3.** Suppose that for every 1 percentage point increase (decrease) in GDP growth, automatic stabilizers: - (i) Increase (decrease) tax revenues by $90 billion and - (ii) Decrease (increase) transfer payments by $30 billion. Using this information, complete the table. **LO4** --- **Table Overview:** The table consists of three columns and three rows showing the impact of changes in GDP growth on tax revenues, transfer payments, and budget balance. - **Column 1:** Change in GDP Growth Rate - **Column 2:** Change in Tax Revenue (billions) - **Column 3:** Change in Transfer Payments (billions) - **Column 4:** Change in Budget Balance (billions) **Table Data:** - **Row 1:** - Change in GDP Growth Rate: -2% - Change in Tax Revenue: (Calculate using formula; not provided in the image) - Change in Transfer Payments: (Calculate using formula; not provided in the image) - Change in Budget Balance: (Calculate using formula; not provided in the image) - **Row 2:** - Change in GDP Growth Rate: +1% - Change in Tax Revenue: (Calculate using formula; not provided in the image) - Change in Transfer Payments: (Calculate using formula; not provided in the image) - Change in Budget Balance: (Calculate using formula; not provided in the image) - **Row 3:** - Change in GDP Growth Rate: +3% - Change in Tax Revenue: (Calculate using formula; not provided in the image) - Change in Transfer Payments: (Calculate using formula; not provided in the image) - Change in Budget Balance: (Calculate using formula; not provided in the image) **Explanation for Calculation:** To fill in the table, use the given formulas: - For each 1% change in GDP growth, tax revenue changes by $90 billion. - For each 1% change in GDP growth, transfer payments change by $30 billion. The change in the budget balance can be calculated by subtracting the change in transfer payments from the change in tax revenue for each specified GDP growth rate.
Transcribed Image Text:**Transcription for Educational Website:** --- **Understanding Automatic Stabilizers and GDP Growth** **3.** Suppose that for every 1 percentage point increase (decrease) in GDP growth, automatic stabilizers: - (i) Increase (decrease) tax revenues by $90 billion and - (ii) Decrease (increase) transfer payments by $30 billion. Using this information, complete the table. **LO4** --- **Table Overview:** The table consists of three columns and three rows showing the impact of changes in GDP growth on tax revenues, transfer payments, and budget balance. - **Column 1:** Change in GDP Growth Rate - **Column 2:** Change in Tax Revenue (billions) - **Column 3:** Change in Transfer Payments (billions) - **Column 4:** Change in Budget Balance (billions) **Table Data:** - **Row 1:** - Change in GDP Growth Rate: -2% - Change in Tax Revenue: (Calculate using formula; not provided in the image) - Change in Transfer Payments: (Calculate using formula; not provided in the image) - Change in Budget Balance: (Calculate using formula; not provided in the image) - **Row 2:** - Change in GDP Growth Rate: +1% - Change in Tax Revenue: (Calculate using formula; not provided in the image) - Change in Transfer Payments: (Calculate using formula; not provided in the image) - Change in Budget Balance: (Calculate using formula; not provided in the image) - **Row 3:** - Change in GDP Growth Rate: +3% - Change in Tax Revenue: (Calculate using formula; not provided in the image) - Change in Transfer Payments: (Calculate using formula; not provided in the image) - Change in Budget Balance: (Calculate using formula; not provided in the image) **Explanation for Calculation:** To fill in the table, use the given formulas: - For each 1% change in GDP growth, tax revenue changes by $90 billion. - For each 1% change in GDP growth, transfer payments change by $30 billion. The change in the budget balance can be calculated by subtracting the change in transfer payments from the change in tax revenue for each specified GDP growth rate.
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