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Unformatted text preview: recession and increases governments budget surplus (or reduces it deficit) during an expansion without any action by policymakers. The tax system is one such mechanism 7. progressive tax system- a tax whose average tax rate increases as the taxpayers income increases and decreases as the income decreases 8. proportional tax system- a tax whose average tax rate remains constant as the taxpayers income increases or decreases 9. regressive tax system- a tax whose average tax rate decreases as the taxpayers income increases and increases as the taxpayers income decreases 10. standardized budget- a comparison of the government expenditures and tax collections that would occur if the economy operated at fully employment throughout the year; the full-employment budget 11. cyclical deficit- a Federal budget deficit that is caused by a recession and the consequent decline in tax revenues 12. recognition lag- 13. administrative lag-...
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- Spring '08
- Fiscal Policy