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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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Lesson 12: Business Cycles | Unit 4: Causes
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Page: 18 of 26
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Instability of business investment is one explanation of business cycles.- During the Great Depression, production declined by 40% and investment declined by over 90%. Did this big drop in investment cause the overall drop in production?
- Investment can trigger changes in production through the circular flow. A decrease in investment, causes a decrease in production, which reduces household income, which reduces consumption, which causes further reductions in production, income, and consumption.
- Small changes in investment can cause magnified changes in aggregate production. A $10 billion decrease in investment might cause a $50 billion decrease in GDP.
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AVERAGE REVENUE CURVE, MONOPOLY A curve that graphically represents the relation between average revenue received by a monopoly for selling its output and the quantity of output sold. Because average revenue is essentially the price of a good, the average revenue curve is also the demand curve for a monopoly's output.
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ORANGE REBELOON [What's This?]
Today, you are likely to spend a great deal of time waiting for visits from door-to-door solicitors trying to buy either a handcrafted spice rack or a cell phone case. Be on the lookout for mail order catalogs with hidden messages. Your Complete Scope
This isn't me! What am I?
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A thousand years before metal coins were developed, clay tablet "checks" were used as money by the Babylonians.
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"Lord, where we are wrong, make us willing to change; where we are right, make us easy to live with. " -- Peter Marshall, US Senate chaplain
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FIML Full Information Maximum Likelihood
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