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ECONOMIC RECOVERY TAX ACT: Unofficially called the Kemp-Roth, this was a cornerstone of economic policy under President Reagan passed in 1981. The three components of this act were: (1) a decrease in individual income taxes, phased in over three years, (2) a decrease in business taxes, primarily through changes in capital depreciation, and (3) the indexing of taxes to inflation, which was implemented in 1985. This act was intended to address the stagflation problems of high unemployment and high inflation that existed during that 1970s and to provide greater incentives for investment. A primary theoretical justification is found in the Laffer curve relation between tax rates and total tax collections.
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INCREASING RETURNS TO SCALE A given proportional change in all resources in the long run results in a proportional greater change in production. Increasing returns to scale exists if a firm increases ALL resources--labor, capital, and other inputs--by a given proportion (say 10 percent) and output increases by more than this proportion (that is more than 10 percent). This is one of three returns to scale. The other two are decreasing returns to scale and constant returns to scale.
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John Maynard Keynes was born the same year Karl Marx died.
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"The ideals that have lighted my way, and time after time have given me new courage to face life cheerfully, have been kindness, beauty and truth. " -- Albert Einstein, physicist
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BAE
Bureau of Agricultural Economics
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