Unplanned investment can be either positive or negative, meaning businessinventories can either rise or fall. Should unplanned investment occur, then actualand planned investment differ, aggregate expenditures are not equal to aggregateoutput, and the macroeconomy is not in equilibrium
An important feature of tax systems is the percentage of the tax burden as it relatesto income or consumption. The terms progressive, regressive, and proportional areused to describe the way the rate progresses from low to high, from high to low, orproportionally. The terms describe a distribution effect, which can be applied to anytype of tax system (income or consumption) that meets the definition.
is a tax imposed so that theeffective tax rateincreases as
the amount to which the rate is applied increases.
The opposite of a progressive tax is a
,where the effective taxrate decreases as the amount to which the rate is applied increases. Thiseffect is commonly produced where means testing is used to withdraw taxallowances or state benefits.
In between is a
, where the effective tax rate is fixed, whilethe amount to which the rate is applied increases.
A lump-sum tax
is a tax that is a fixed amount, no matter the change incircumstance of the taxed entity
If lump sum tax applied thenT= TºIf proportional tax systemT= t * YMultiplier in case of Proportional tax system = 1/[1 – c
(1 – t)]