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December 9, 2018 

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AGGREGATE EXPENDITURE EQUATION: An equation indicating that aggregate expenditures (AE) are the sum of consumption expenditures (C), investment expenditures (I), government purchases (G), and net exports (X-M), stated as: AE = C + I + G + (X-M). This equation surfaces in the Keynesian economic income-expenditure model in the form of the aggregate expenditures line. However, it's also central throughout the study of macroeconomics, including aggregate demand and the measurement of gross domestic product.

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TAX RATE: The percent of the tax base that is collected as tax. The tax rate can be a flat, or proportional, rate, meaning it is a constant percent of the tax base regardless of the size or value of the base. Or the tax rate can change as the tax base changes. If the tax rate increases, the tax is progressive. If the tax rate decreases, the tax is regressive.

     See also | taxes | tax base | tax incidence | tax proportionality | proportional tax | progressive tax | regressive tax | average tax rate | marginal tax rate |


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BALANCED-BUDGET MULTIPLIER

A measure of the change in aggregate production caused by equal changes in government purchases and taxes. The balanced-budget multiplier is equal to one, meaning that the multiplier effect of a change in taxes offsets all but the initial production triggered by the change in government purchases. This multiplier is the combination of the expenditures multiplier, which measures the change in aggregate production caused by changes in an autonomous aggregate expenditure, and the tax multiplier which measures the change in aggregate production caused by changes in taxes.

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Today, you are likely to spend a great deal of time going from convenience store to convenience store seeking to buy either a turbo-powered vacuum cleaner or a battery-powered, rechargeable vacuum cleaner. Be on the lookout for defective microphones.
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Parker Brothers, the folks who produce the Monopoly board game, prints more Monopoly money each year than real currency printed by the U.S. government.
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