consumption/ savings

• Disposable Income
• Income after taxes or net income
• DI=Gross Income - Taxes
• Either save or spend, cannot do both equally.
• Consumption
• Household spending, the ability is constrained by the amount of DI and the propensity to save.
• Autonomous Consumption
• Households consuming when DI=0
• Dis-saving
• Saving
• Household not spending
• The ability to save is constrained by the amount of DI and the propensity to consume.
• Households DO NOT save when DI=0
• APC and APS
• APC + APS = 1
• APC > 1 = Dissaving, -APS = Dissaving
• APS = S / DI = %DI not spent
• APC = C / DI = % DI
• MPC and MPS
• MPC + MPS = 1
• ΔC / ΔDI = Marginal Propensity to Consume
• ΔS / ΔDI = Marginal Propensity to Save
• Determinants of Consumption and Saving
• Wealth
• Expectations
• Household Debt
• Taxes