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DEMAND ELASTICITY AND TOTAL EXPENDITURE: The notion that price-induced changes in total expenditure for a good (price times quantity) depends on the relative price elasticity of demand. In particular, for relatively elastic demand (1 < E < ∞) changes in price cause total expenditure to change in the opposite direction. An increase in price causes total expenditure to fall and a decrease in price causes total expenditure to rise. For relatively inelastic demand (0 < E < 1) changes in price cause total expenditure to change in the same direction. An increase in price causes total expenditure to rise and a decrease in price causes total expenditure to fall. For unit elastic demand (E =1) price changes do not cause any change in total expenditure. Total expenditure is the same whether price increases or decreases.
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TAX MULTIPLIER A measure of the change in aggregate production caused by changes in government taxes. The tax multiplier is the negative marginal propensity to consume times one minus the slope of the aggregate expenditures line. The simple tax multiplier includes ONLY induced consumption. More complex tax multipliers include other induced components. Two related multipliers are the expenditures multiplier, which measures the change in aggregate production caused by changes in an autonomous aggregate expenditure, and the balanced-budget multiplier which measures the change in aggregate production from equal changes in both taxes and government purchases.
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YELLOW CHIPPEROON
[What's This?]
Today, you are likely to spend a great deal of time surfing the Internet hoping to buy either a small palm tree that will fit on your coffee table or several magazines on fashion design. Be on the lookout for strangers with large satchels of used undergarments.
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The 1909 Lincoln penny was the first U.S. coin with the likeness of a U.S. President.
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"The victory of success is half won when one gains the habit of setting goals and achieving them. Even the most tedious chore will become endurable as you parade through each day convinced that every task, no matter how menial or boring, brings you closer to fulfilling your dreams." -- Og Mandino, Author and Speaker
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EBC
Electronic Business Communications
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