ECON 104 Lecture Notes - Lecture 10: Tax Rate, Gross Income, Aggregate Demand
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29 Jul 2016
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Calculate the change in aggregate demand, with and without the automatic stabilizers. Your old job paid you ,000 per year. Your new job pays you ,000 per year. Your marginal tax rate is 25% (percent of new additional income that you"re paying in taxes). Income increased by ,000, and 25% of that ,000 is being paid in taxes (,500). Without automatic stabilizers, increase in ad is ,000. Your income used to be ,000 per year. With all the extra overtime, you now earn ,000. Without automatic stabilizers, increase in ad is ,000. You find a job and get off of welfare. You had been collecting ,000 per year in welfare, but that now stops. Without automatic stabilizers, increase in ad is ,000. You are called back from layoff and stop collecting unemployment insurance. The income from your job is ,000 per year. You had been collecting half of that (,000) in unemployment insurance.