ABSTRACT
The remaining items in the table represent various categories of tax or subsidy. The first of these is a specific indirect tax, e.g. a tax of a given amount on a pint of beer. If total expenditures go up by 10 per cent because of increases in factor costs with all quantities unchanged, the revenue from the specific tax will represent a smaller proportion of the Money GDP (which we measure at factor cost); the tax will, therefore, be exerting a smaller proportionate damping effect, which we represent in the table as a net increase in a stimulating effect. But if the inflation of the Money GDP had been due to a 10 per cent increase in all quantities, including the quantity of the taxed product, the proportionate effect of the tax on total expenditures would have been unchanged. Conversely, part of the proportionate stimulating effect of a specific subsidy would be lost as a result of price rises but its proportionate effect would remain unchanged as a result of an increase in every output.
