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TAX: Any sort of forced or coerced payment to government. The primary reason government collects taxes is to get the revenue needed to finance public goods and pay administrative expenses. However, the more astute leaders of the first estate have recognized over the years that taxes have other effects, including--(1) redirecting resources from one good to another and (2) altering the total amount of production in the economy. As such, taxes have been used to correct market failures, equalize the income distribution, achieve efficiency, stabilize business cycles, and promote economic growth.
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                           SAVING LINE: A graphical depiction of the relation between household sector saving and income. The saving line is closely related to the consumption line that forms one of the key building blocks for Keynesian economics. A saving line is characterized by vertical intercept, which indicates autonomous saving, and slope, which is the marginal propensity to save and indicates induced saving. The injections-leakages model used in Keynesian economics is based on the saving line. The saving',500,400)">saving line, also termed propensity-to-save line or saving function, shows the relation between saving and income for the household sector. The income measure commonly used is national income or disposable income. Occasionally a measure of aggregate production, such as gross domestic product, is used instead.The purpose of the saving line is to graphically illustrate the basic saving-income relation for the household sector, which is the foundation of the injections-leakages model used in Keynesian economics. Two basic types of saving are indicated by the saving line. Autonomous saving is the vertical intercept, or Y-intercept, of the saving line. Induced saving is the slope of the saving line. Of no small importance, the slope of the saving line is also the marginal propensity to save (MPS). | Saving Line | 
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A representative saving line is presented in the exhibit to the right. This red line, labeled S in the exhibit is positively sloped, indicating that greater levels of income generate greater saving by the household sector. This positive relation corresponds to the fundamental psychological law of Keynesian economics.The two primary characteristics of the saving line are slope and intercept: - Slope: The slope of the saving line presented here is positive, but less than one. In fact, the slope of the saving line is numerically equal to the marginal propensity to save. In this case the slope is equal to 0.25. The positive slope reflects induced saving--more income means more saving. It also reflects the basic Keynesian psychological law. Click the [Slope] button to illustrate.
- Intercept: The saving line intersects the vertical axis at a value of -$1 trillion. This intersection indicates autonomous saving--saving unrelated to income. Autonomous saving is usually negative, indicating dissaving. This occurs because autonomous consumption is positive. Click the [Intercept] button to illustrate.
Note that the level of income (and production) generated by full employment of resources is NOT indicated in this exhibit. Full employment could correspond with $2 trillion of income or $20 trillion. There is no way of knowing. This is particularly important when injections-leakages model, used to identified equilibrium, is derived based on the saving line.
Recommended Citation:SAVING LINE, AmosWEB Encyclonomic WEB*pedia, http://www.AmosWEB.com, AmosWEB LLC, 2000-2025. [Accessed: January 18, 2025].
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PINK FADFLY
[What's This?]
Today, you are likely to spend a great deal of time looking for a downtown retail store trying to buy either a how-to book on the art of negotiation or a flower arrangement for your aunt. Be on the lookout for neighborhood pets, especially belligerent parrots.
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Paper money used by the Commonwealth of Massachusetts prior to the U.S. Revolutionary War, which was issued against the dictates of Britain, was designed by patriot and silversmith, Paul Revere.
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"Twenty years from now you will be more disappointed by the things that you didn't do than by the ones you did do. So throw off the bowlines. Sail away from the safe harbor. Catch the trade winds in your sails. Explore. Dream. Discover." -- Mark Twain
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IROR
Internal Rate of Return
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