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A consumption tax is a tax levied on consumption spending on goods and services. The tax base of such a tax is the money spent on consumption. Consumption taxes are usually indirect, such as a sales tax or a value-added tax. However, a consumption tax can also be structured as a form of direct, personal taxation, such as the Hall–Rabushka ...
A Robinson Crusoe economy is a simple framework used to study some fundamental issues in economics. [1] It assumes an economy with one consumer, one producer and two goods. The title "Robinson Crusoe" is a reference to the 1719 novel of the same name authored by Daniel Defo
In figure 3, the income–consumption curve bends back on itself as with an increase income, the consumer demands more of X 2 and less of X 1. [3] The income–consumption curve in this case is negatively sloped and the income elasticity of demand will be negative. [4] Also the price effect for X 2 is positive, while it is negative for X 1. [3]
[21]) The model assumes that there is no financial sector, no government sector, and no foreign sector. In addition, the model assumes that (a) through their expenditures, households spend all of their income on goods and services or consumption and (b) through their expenditures, households purchase all output produced by firms. [18]
A macroeconomic model is an analytical tool designed to describe the operation of the problems of economy of a country or a region. These models are usually designed to examine the comparative statics and dynamics of aggregate quantities such as the total amount of goods and services produced, total income earned, the level of employment of productive resources, and the level of prices.
In addition, the model is often used as a sub-model of larger models which allow for a flexible price level. The addition of a supply relation enables the model to be used for both short- and medium-run analysis of the economy, or to use a different terminology: classical and Keynesian analysis. [15]
A cash-flow consumption tax is intended to confine the cash-flow tax burden to an individual's annual consumption and to remove nonconsumption expenses and current savings from the tax base. [9] The base is calculated by combining the year's gross receipts and savings withdrawals, and then subtracting the year's business and investment expenses ...
Similarly, business failures and stock market prices tend to be countercyclical. In finance, an asset that tends to do well while the economy as a whole is doing poorly is referred to as countercyclical, and could be for example a business or a financial instrument whose value is derived from sales of an inferior good.