Scribd Logo
Upload

Welcome to Scribd!

  • 38 views

    Basic Macroeconomic Relationships

    Uploaded by

    Rika Miyazaki
    Disposable income equals GDP minus income taxes. Individuals can choose to either consume or save their disposable income. Consumption is the amount spent on goods and services that is included in calculating GDP, while savings is disposable income not consumed. The break-even point is where an individual's consumption equals their disposable income.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd

    Basic Macroeconomic Relationships

    Uploaded by

    Rika Miyazaki
    38 views1 page
    Disposable income equals GDP minus income taxes. Individuals can choose to either consume or save their disposable income. Consumption is the amount spent on goods and services that is included in calculating GDP, while savings is disposable income not consumed. The break-even point is where an individual's consumption equals their disposable income.

    Copyright

    © © All Rights Reserved

    Available Formats

    DOCX, PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    Disposable income equals GDP minus income taxes. Individuals can choose to either consume or save their disposable income. Consumption is the amount spent on goods and services that is included in calculating GDP, while savings is disposable income not consumed. The break-even point is where an individual's consumption equals their disposable income.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    38 views1 page

    Basic Macroeconomic Relationships

    Uploaded by

    Rika Miyazaki
    Disposable income equals GDP minus income taxes. Individuals can choose to either consume or save their disposable income. Consumption is the amount spent on goods and services that is included in calculating GDP, while savings is disposable income not consumed. The break-even point is where an individual's consumption equals their disposable income.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 1

    Basic Macroeconomic Relationships

    Income Consumptions and Income Saving Relationship


    Revenue = Personal Consumption
    Revenue represents GDP.
    Disposable Income = GDP
    Income – Income Tax
    The reason you can buy, because somebody produces something.
    What are the two things you can do with our income?
    - Consume (Spend) or Save
    - Disposable Income
    o Either consume or spend. But only consuming will be put in GDP.
    o After Tax
    o DI = Consumption + Saving
    o 45-degree line reference
    - C = DI on the line
    - Savings = DI - C
    Loss = Dissaving
    Dissaving – consumption is greater that disposable income.
    C intersect DI = Breakeven Point
    *should be Disposable Income.
    When households spend their entire incomes:
    “Average Propensity to Consume” (APC)
    - The % of DI that is spent
    APC = Consumption/Income
    “Average Propensity to Save” (APS)
    APS = Saving/Income

    You might also like