defined the consumption function relate it with saving function
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hi frnd
Saving is that part of income which is not spent on current consumption. The relationship between saving and income is called saving function.
Simply put, saving function (or propensity to save) relates the level of saving to the level of income. It is the desire or tendency of the households to save at a given level of income. Thus, saving (S) is a function (f) of income (Y).
Symbolically,
S = f (Y)
Two noteworthy features of saving function are:
(i) Saving can be negative (-) at zero or low level of income and (ii) As Income increases, savings also increase but more than the increase in income
Remember, saving is residual income of households that is left after consumption.
Algebraically:
S = Y-C
Saving is that part of income which is not spent on current consumption. The relationship between saving and income is called saving function.
Simply put, saving function (or propensity to save) relates the level of saving to the level of income. It is the desire or tendency of the households to save at a given level of income. Thus, saving (S) is a function (f) of income (Y).
Symbolically,
S = f (Y)
Two noteworthy features of saving function are:
(i) Saving can be negative (-) at zero or low level of income and (ii) As Income increases, savings also increase but more than the increase in income
Remember, saving is residual income of households that is left after consumption.
Algebraically:
S = Y-C
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