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TAX MULTIPLIER: The ratio of the change in aggregate output (or gross domestic product) to an autonomous change in a taxes. The tax multiplier is equal to the expenditure multiplier times the marginal propensity to consume. This is based on the only a fraction of the change in disposable income resulting from the change in taxes will result in a change in consumption expenditures. The tax multiplier can be used to indicate the change in fiscal policy induced government taxes are needed to achieve a given level of aggregate output (presumably full-employment output).
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ASSUMPTIONS, CLASSICAL ECONOMICS Classical economics, especially as directed toward macroeconomics, relies on three key assumptions--flexible prices, Say's law, and saving-investment equality. Flexible prices ensure that markets adjust to equilibrium and eliminate shortages and surpluses. Say's law states that supply creates its own demand and means that enough income is generated by production to purchase the resulting production. The saving-investment equality ensures that any income leaked from consumption into saving is replaced by an equal amount of investment. Although of questionable realism, these three assumptions imply that the economy would operate at full employment.
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GRAY SKITTERY
[What's This?]
Today, you are likely to spend a great deal of time watching infomercials trying to buy either a birthday greeting card for your grandfather or a weathervane with a cow on top. Be on the lookout for deranged pelicans.
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Natural gas has no odor. The smell is added artificially so that leaks can be detected.
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"Genius is an infinite capacity for taking pains. " -- Jane Ellis Hopkins, writer
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CPI
Consumer Price Index
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