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ABILITY-TO-PAY PRINCIPLE: A principle of taxation in which taxes are based on the income or resource-ownership ability of people to pay the tax. The income tax collected by our friends at the Internal Revenue Service is one of the most common taxes that seeks to abide by the ability-to-pay principle. In theory, the income tax system is set up such that people with greater incomes pay more taxes. Proportional and progressive taxes follow this ability-to-pay principle, while regressive taxes, such as sales taxes and Social Security taxes, don't.
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CONSUMPTION LINE: A graphical depiction of the relation between household consumption expenditures and household disposable income that forms one of the key building blocks for Keynesian economics. The slope of this line is positive, greater than zero, less than one, and goes by the name marginal propensity to consume. The vertical intercept of the consumption line is autonomous consumption. The aggregate expenditures line used in the Keynesian cross is obtained by adding investment, government purchases, and net exports to the consumption line. Because saving is the difference between disposable income and consumption, the saving line is a complementary relation to the consumption line. See also | consumption function | Keynesian economics | consumption expenditures | disposable income | marginal propensity to consume | aggregate expenditures | aggregate expenditures line | Keynesian cross | induced consumption | autonomous consumption |
Recommended Citation:CONSUMPTION LINE, AmosWEB GLOSS*arama, http://www.AmosWEB.com, AmosWEB LLC, 2000-2026. [Accessed: September 13, 2026].
AmosWEB Encyclonomic WEB*pedia:Additional information on this term can be found at: WEB*pedia: consumption line
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COMPENSATING WAGE DIFFERENTIALS Different wages paid to different workers or in different markets that adjust for differences in the jobs or in the productivity of the workers. Wage differentials occur for many reasons. Quite often they are the result of the personal preferences of workers. In some cases workers are willing to "buy" leisure-time or other types of household production by taking lower wages. Differences in job risks, education, and location are also reasons for the persistence of wage differentials.
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YELLOW CHIPPEROON
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Today, you are likely to spend a great deal of time looking for the new strip mall out on the highway looking to buy either a half-dozen helium filled balloons or a packet of address labels large enough for addresses of both the sender and the recipient. Be on the lookout for crowded shopping malls.
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The portion of aggregate output U.S. citizens pay in taxes (30%) is less than the other six leading industrialized nations -- Britain, Canada, France, Germany, Italy, or Japan.
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"Just as iron rusts from disuse, even so does inaction spoil the intellect. " -- Leonardo da Vinci, architect, artist
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AFC
Average Fixed Cost
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