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The saving identity or the saving-investment identity is a concept in national income accounting stating that the amount saved in an economy will be the amount invested in new physical machinery, new inventories, and the like.
Here, we define S as National savings (= savings of private sector + savings of government) and rewrite the identity as following: = This identity implies that the difference of national savings and national investment is equal to current account. [2] [3] [4]
Discretionary income is disposable income (after-tax income), minus all payments that are necessary to meet current bills. It is total personal income after subtracting taxes and minimal survival expenses (such as food, medicine, rent or mortgage, utilities, insurance, transportation, property maintenance, child support, etc.) to maintain a certain standard of living. [7]
The end result is a magnified, multiplied change in aggregate production initially triggered by the change in investment, but amplified by the change in consumption i.e. the initial investment multiplied by the consumption coefficient (Marginal Propensity to consume).
(Y − T + TR) is disposable income whereas (Y − T + TR − C) is private saving. Public saving, also known as the budget surplus, is the term (T − G − TR), which is government revenue through taxes, minus government expenditures on goods and services, minus transfers. Thus we have that private plus public saving equals investment.
Savings and loans associations are usually smaller institutions compared to other mortgage lenders, concentrating on growing homeownership and meeting the financial needs of local consumers.
The IS curve also represents the equilibria where total private investment equals total saving, with saving equal to consumer saving plus government saving (the budget surplus) plus foreign saving (the trade surplus). The level of real GDP (Y) is determined along this line for each interest rate. Every level of the real interest rate will ...
If you've been having trouble with any of the connections or words in Friday's puzzle, you're not alone and these hints should definitely help you out. Plus, I'll reveal the answers further down ...