What is private saving?

Economics Today and Tomorrow, Student Edition
1st Edition
ISBN:9780078747663
Author:McGraw-Hill
Publisher:McGraw-Hill
Chapter6: Saving And Investing
Section6.1: Why Save?
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What is private saving?

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Step 1

Private savings are the amount left with the household after spending money on taxes and consumption. In other words, it is the amount available for investment to the households after paying for their consumption and taxes.

Step 2

Formula:

Economics homework question answer, step 2, image 1

where,

S=Savings

Y=Income

T=Taxes

C=Cosnumption

TR=Transfer payments

Note: Transfer payments are received by the households from the government that is why it is added.

 

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