Economics (McConnell) AP Edition, 19th Edition

Chapter 35: Extending the Analysis of Aggregate Supply

Web-based Questions

1
The Laffer Curve—Does it stretch? Congress did not substantially change Federal income tax rates between 1993 and 2000. Visit the Bureau of Economic Analysis Web site, www.bea.gov. Under Publications, click on Interactive Data Tables. On that page, click on "National Income and Product Accounts," and then on the next page click on "List of All NIPA Tables." On the page that comes up, find Table 3.2 on Federal government current receipts and expenditures. Find the annual revenues from the Federal income tax from 1993 to 2000. What happened to those revenues over those years? Given constant tax rates, what do the changes in tax revenues suggest about changes in the shape of the Laffer Curve? If lower (or higher) tax rates do not explain the changes in tax revenues, what do you think does?
2
Dynamic tax scoring—What is it, and who wants it? Go to www.google.com and search for information on "dynamic tax scoring." What is it? How does it relate to supply-side economics? Which political groups support this approach, and why? What groups oppose it, and why?
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