Marginal propensity to consume- it is the slope of the consumption spending function. It is the induced proportion of the equation. if C=5+0.6Y then the MPC tells us for every additional dollar of income we spend 0.60. slope = rise/run = change in consumption/ change in income = mpc Savings
Savings is the portion of the national income not spent on Net taxes or Consumption spending. when you are spending more on consumption spending then we have in disposable income(income-net taxes) we have dissavings (pulling money out of savings). Marginal Propensity to Save- the change in savings for a corresponding change in income. it is the slope of the savings function. if S= -65+.2y then the MPS is .2. it tells us that for every additional dollar of income we save .2. te amount of disposable income not spent must be saved. in an economy with no taxes mpc + mps = 1 Disposable income = income - net taxes
the amount of disposable income not spent is saved. in an economy with net taxes MPCd+MPSd =1 MPCd is the change in consumption spending divided by the change in disposable income. MPSd is the change in savings divided by the change in disposable income
Dr. Stephanie Powers, "Aggregate Demand", Intro to Macroeconomics.(Lecture, Donald School of Business, Red Deer Alberta, Winter 2012)
Marginal propensity to consume- it is the slope of the consumption spending function. It is the induced proportion of the equation. if C=5+0.6Y then the MPC tells us for every additional dollar of income we spend 0.60. slope = rise/run = change in consumption/ change in income = mpc
Savings
Savings is the portion of the national income not spent on Net taxes or Consumption spending. when you are spending more on consumption spending then we have in disposable income(income-net taxes) we have dissavings (pulling money out of savings).
Marginal Propensity to Save- the change in savings for a corresponding change in income. it is the slope of the savings function. if S= -65+.2y then the MPS is .2. it tells us that for every additional dollar of income we save .2. te amount of disposable income not spent must be saved. in an economy with no taxes mpc + mps = 1
Disposable income = income - net taxes
the amount of disposable income not spent is saved. in an economy with net taxes MPCd+MPSd =1 MPCd is the change in consumption spending divided by the change in disposable income. MPSd is the change in savings divided by the change in disposable income
Dr. Stephanie Powers, "Aggregate Demand", Intro to Macroeconomics.(Lecture, Donald School of Business, Red Deer Alberta, Winter 2012)