Definition of Inflation Tax The inflation tax is an implicit tax imposed on holders of money due to the effects of inflation. That means it is a tax on the real value of their money because inflation erodes the purchasing power of money over time. Example To illustrate this, let’s […]
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Inflation Rate
Definition of Inflation Rate The inflation rate is the rate at which the general level of prices for goods and services is rising, and therefore, subsequently, purchasing power is falling. That means it is a measure of the average change in the prices of goods and services that households buy. […]
Read moreMarginal Product
Definition of Marginal Product The marginal product is defined as the additional output that is produced by adding one more unit of a particular input. That means it is the increase in output that results from increasing the quantity of one input, while keeping all other inputs constant. Example To […]
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Definition of Inflation Inflation is defined as a sustained increase in the general price level of goods and services in an economy over a period of time. That means it is a measure of how much more expensive goods and services have become compared to a certain base period and […]
Read moreIndirect Tax
Definition of Indirect Tax An indirect tax is a tax that is imposed on goods and services rather than on individuals or businesses. That means it is paid by the consumer when they purchase a good or service, but the tax is collected by the seller. Common examples of indirect […]
Read moreIndifference Curve
Definition of Indifference Curve An indifference curve is a graphical representation of a consumer’s preferences for two goods. It shows all the combinations of two goods that yield the same level of satisfaction for the consumer. That means it is a curve that connects all the combinations of two goods […]
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Definition of Indexation Indexation (i.e., escalation) is the process of adjusting the price of a financial instrument or contract (e.g., wages) to account for changes in the value of money over time. That means it is a way to protect the purchasing power of a financial instrument or contract by […]
Read moreMarginal Product Of Labor
Definition of Marginal Product of Labor The marginal product of labor (MPL) is defined as the additional output that is produced by adding one additional unit of labor. That means it is the increase in output that results from employing one more worker or putting in one more hour of […]
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Definition of Marginal Rate of Substitution The marginal rate of substitution (MRS) is a measure of the rate at which a consumer is willing to substitute one good for another in order to maintain a given level of satisfaction. That means it describes how much of one good a consumer […]
Read moreMarginal Revenue
Definition of Marginal Revenue Marginal revenue (MR) is defined as the additional revenue a company earns by selling one additional unit of a good or service. That means it is the change in total revenue that results from a one-unit increase in output. In most cases, MR is equal to […]
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