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Average Propensity To Save
In Keynesian economics, the average propensity to save (APS), also known as the savings ratio, is the proportion of income which is saved, usually expressed for household savings as a fraction of total household disposable income (taxed income). APS=\frac The ratio differs considerably over time and between countries. The savings ratio for an entire economy can be affected by (for example) the proportion of older people (as they have less motivation and capability to save), and the rate of inflation (as expectations of rising prices can encourage people to spend now rather than later) or current interest rates. APS can express the social preference for investing in the future over consuming in the present. The complement (1 minus the APS) is the average propensity to consume (APC). Low average propensity to save might be the indicator of a large percentage of old people or high percentage of irresponsible young people in the population. With income level changes, APS becomes an ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Keynesian Economics
Keynesian economics ( ; sometimes Keynesianism, named after British economist John Maynard Keynes) are the various macroeconomic theories and models of how aggregate demand (total spending in the economy) strongly influences economic output and inflation. In the Keynesian view, aggregate demand does not necessarily equal the productive capacity of the economy. Instead, it is influenced by a host of factors – sometimes behaving erratically – affecting production, employment, and inflation. Keynesian economists generally argue that aggregate demand is volatile and unstable and that, consequently, a market economy often experiences inefficient macroeconomic outcomes – a recession, when demand is low, or inflation, when demand is high. Further, they argue that these economic fluctuations can be mitigated by economic policy responses coordinated between government and central bank. In particular, fiscal policy actions (taken by the government) and monetary policy actions (t ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Income
Income is the consumption and saving opportunity gained by an entity within a specified timeframe, which is generally expressed in monetary terms. Income is difficult to define conceptually and the definition may be different across fields. For example, a person's income in an economic sense may be different from their income as defined by law. An extremely important definition of income is Haig–Simons income, which defines income as ''Consumption + Change in net worth'' and is widely used in economics. For households and individuals in the United States, income is defined by tax law as a sum that includes any wage, salary, profit, interest payment, rent, or other form of earnings received in a calendar year.Case, K. & Fair, R. (2007). ''Principles of Economics''. Upper Saddle River, NJ: Pearson Education. p. 54. Discretionary income is often defined as gross income minus taxes and other deductions (e.g., mandatory pension contributions), and is widely used as a basis to co ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Savings
Wealth is the abundance of valuable financial assets or physical possessions which can be converted into a form that can be used for transactions. This includes the core meaning as held in the originating Old English word , which is from an Indo-European word stem. The modern concept of wealth is of significance in all areas of economics, and clearly so for growth economics and development economics, yet the meaning of wealth is context-dependent. An individual possessing a substantial net worth is known as ''wealthy''. Net worth is defined as the current value of one's assets less liabilities (excluding the principal in trust accounts). At the most general level, economists may define wealth as "the total of anything of value" that captures both the subjective nature of the idea and the idea that it is not a fixed or static concept. Various definitions and concepts of wealth have been asserted by various individuals and in different contexts.Denis "Authentic Development: Is i ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Disposable Income
Disposable income is total personal income minus current income taxes. In national accounts definitions, personal income minus personal current taxes equals disposable personal income. Subtracting personal outlays (which includes the major category of personal r privateconsumption expenditure) yields personal (or, private) savings, hence the income left after paying away all the taxes is referred to as disposable income. Restated, consumption expenditure plus savings equals disposable income after accounting for transfers such as payments to children in school or elderly parents’ living and care arrangements. The marginal propensity to consume (MPC) is the fraction of a change in disposable income that is consumed. For example, if disposable income rises by $100, and $65 of that $100 is consumed, the MPC is 65%. Restated, the marginal propensity to save is 35%. For the purposes of calculating the amount of income subject to garnishments, United States' federal law defin ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Inflation
In economics, inflation is an increase in the general price level of goods and services in an economy. When the general price level rises, each unit of currency buys fewer goods and services; consequently, inflation corresponds to a reduction in the purchasing power of money. The opposite of inflation is deflation, a sustained decrease in the general price level of goods and services. The common measure of inflation is the inflation rate, the annualized percentage change in a general price index. As prices do not all increase at the same rate, the consumer price index (CPI) is often used for this purpose. The employment cost index is also used for wages in the United States. Most economists agree that high levels of inflation as well as hyperinflation—which have severely disruptive effects on the real economy—are caused by persistent excessive growth in the money supply. Views on low to moderate rates of inflation are more varied. Low or moderate inflation may be attri ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Average Propensity To Consume
Average propensity to consume (as well as the marginal propensity to consume) is a concept developed by John Maynard Keynes to analyze the consumption function, which is a formula where total consumption expenditures (C) of a household consist of autonomous consumption (Ca) and income (Y) (or disposable income (YD)) multiplied by marginal propensity to consume (c or MPC). According to Keynes, the individual´s real income determines saving and consumption decisions. Consumption function: C=+cY The average propensity to consume is referred to as the percentage of income spent on goods and services. It is the proportion of income that is consumed and it is calculated by dividing total consumption expenditure (C) by total income (Y): APC=\frac=\frac+c It can be also explained as spending on every monetary unit of income. Moreover Keynes´s theory claims that wealthier people spend less of their income on consumption than less wealthy people. This is caused by autonomous consumptio ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Derivative
In mathematics, the derivative of a function of a real variable measures the sensitivity to change of the function value (output value) with respect to a change in its argument (input value). Derivatives are a fundamental tool of calculus. For example, the derivative of the position of a moving object with respect to time is the object's velocity: this measures how quickly the position of the object changes when time advances. The derivative of a function of a single variable at a chosen input value, when it exists, is the slope of the tangent line to the graph of the function at that point. The tangent line is the best linear approximation of the function near that input value. For this reason, the derivative is often described as the "instantaneous rate of change", the ratio of the instantaneous change in the dependent variable to that of the independent variable. Derivatives can be generalized to functions of several real variables. In this generalization, the derivativ ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Savings Function
Wealth is the abundance of valuable financial assets or physical possessions which can be converted into a form that can be used for transactions. This includes the core meaning as held in the originating Old English word , which is from an Indo-European word stem. The modern concept of wealth is of significance in all areas of economics, and clearly so for growth economics and development economics, yet the meaning of wealth is context-dependent. An individual possessing a substantial net worth is known as ''wealthy''. Net worth is defined as the current value of one's assets less liabilities (excluding the principal in trust accounts). At the most general level, economists may define wealth as "the total of anything of value" that captures both the subjective nature of the idea and the idea that it is not a fixed or static concept. Various definitions and concepts of wealth have been asserted by various individuals and in different contexts.Denis "Authentic Development: Is i ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Average Propensity To Consume
Average propensity to consume (as well as the marginal propensity to consume) is a concept developed by John Maynard Keynes to analyze the consumption function, which is a formula where total consumption expenditures (C) of a household consist of autonomous consumption (Ca) and income (Y) (or disposable income (YD)) multiplied by marginal propensity to consume (c or MPC). According to Keynes, the individual´s real income determines saving and consumption decisions. Consumption function: C=+cY The average propensity to consume is referred to as the percentage of income spent on goods and services. It is the proportion of income that is consumed and it is calculated by dividing total consumption expenditure (C) by total income (Y): APC=\frac=\frac+c It can be also explained as spending on every monetary unit of income. Moreover Keynes´s theory claims that wealthier people spend less of their income on consumption than less wealthy people. This is caused by autonomous consumptio ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Marginal Propensity To Save
The marginal propensity to save (MPS) is the fraction of an increase in income that is not spent and instead used for saving. It is the slope of the line plotting saving against income. For example, if a household earns one extra dollar, and the marginal propensity to save is 0.35, then of that dollar, the household will spend 65 cents and save 35 cents. Likewise, it is the fractional decrease in saving that results from a decrease in income. The MPS plays a central role in Keynesian economics as it quantifies the saving-income relation, which is the flip side of the consumption-income relation, and according to Keynes it reflects the fundamental psychological law. The marginal propensity to save is also a key variable in determining the value of the multiplier. Calculation MPS can be calculated as the change in savings divided by the change in income. :MPS=\frac Or mathematically, the marginal propensity to save (MPS) function is expressed as the derivative of the savings ( ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Marginal Propensity To Consume
In economics, the marginal propensity to consume (MPC) is a metric that quantifies induced consumption, the concept that the increase in personal consumer spending (consumption) occurs with an increase in disposable income (income after taxes and transfers). The proportion of disposable income which individuals spend on consumption is known as propensity to consume. MPC is the proportion of additional income that an individual consumes. For example, if a household earns one extra dollar of disposable income, and the marginal propensity to consume is 0.65, then of that dollar, the household will spend 65 cents and save 35 cents. Obviously, the household cannot spend ''more'' than the extra dollar (without borrowing or using savings). If the extra money accessed by the individual gives more economic confidence, then the MPC of the individual may well exceed 1, as they may borrow or utilise savings. The MPC is higher in the case of poorer people than in rich. According to John Mayna ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
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