Question

Canada's Economy Surges 4.5 Percent Canadian real GDP unexpectedly accelerated to a 4.5 percent pace in the second quarter of 2017. This faster than expected growth was the fastest among Group of Seven countries. It was led by the biggest rise in household spending since before the 2008-2009 global recession Source: Bloomberg, August 31, 201 How would an unexpected increase in the economic growth rate influence federal government outlays? Federal government outlays would because A decrease, government expenditure on goods and services would fall B. increase, debt interest would increase Mc decrease transfer payments such as unemployment benefits would fall D. not change the economic growth rate doesn't influence federal government outlays How would an unexpected increase in the economic growth rate influence federal government revenues? Federal government revenues would because O A decrease, the government would lower the tax rates OB increase the goverment would eam more interest O not change the economic growth rate doesn't influence federal government revenues OD. increase taxable incomes would rise and tax payments would increase

Answer 1

Option D

Greater consumption implies greater income, therefore even at an earlier level of the tax rate, now greater revenue will be generated.