Tax multiplier

Tax multiplier is the change in aggregate income resulting from a one-dollar change in taxes. Taylor principle]]. The proposition that a central bank should respond to an increase in inflation with an even greater increase in the nominal interest rate. Taylor rule]]. A rule for monetary policy according to which the central bank sets the interest rate as a function of inflation and the deviation of output from its natural level.

Definition

According to Macroeconomics by Mankiw (7th edition),

Tax multiplier. The change in aggregate income resulting from a one-dollar change in taxes. Taylor principle]]. The proposition that a central bank should respond to an increase in inflation with an even greater increase in the nominal interest rate. Taylor rule]]. A rule for monetary policy according to which the central bank sets the interest rate as a function of inflation and the deviation of output from its natural level.