BackThe Saving Function definitions
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1/15BackSkip to main contentBackSavings Function
Shows the relationship between household savings and disposable income, illustrating how much is saved at various income levels. Consumption Function
Represents how households allocate disposable income toward consumption, paralleling the savings function in structure. Disposable Income
Refers to income remaining after taxes, available for spending on consumption or for saving. Savings Schedule
A tabular or graphical representation of the amount saved at different levels of disposable income. 45-Degree Line
A graphical reference where all disposable income is hypothetically saved, indicating zero consumption. Marginal Propensity to Save
Measures the fraction of each additional dollar of disposable income that is saved, represented by the slope of the savings function. Marginal Propensity to Consume
Indicates the portion of each extra dollar of disposable income that is spent on consumption, typically larger than its saving counterpart. Slope
Describes the rate at which savings change in response to changes in disposable income on the savings function graph. Bonus
An unexpected increase in income, often leading to higher consumption and savings. Raise
A permanent increase in salary, resulting in higher disposable income and typically boosting both consumption and savings. Household Savings
The portion of disposable income not used for consumption, accumulated for future use. Consumption
The part of disposable income spent on goods and services rather than saved. Income Level
A specific amount of disposable income, used to determine corresponding savings and consumption. Change in Savings
The difference in the amount saved resulting from a change in disposable income. Change in Disposable Income
An increase or decrease in after-tax income, affecting both consumption and savings decisions.
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