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SAVING LINE: A graphical depiction of the relation between household saving and household disposable income. The slope of this line is positive, greater than zero, less than one, and goes by the name marginal propensity to save. The vertical intercept of the saving line is autonomous saving. The saving and investment, or leakage and injection, analysis used in Keynesian economics begins with the saving line. Because consumption is the difference between disposable income and saving, the consumption line is a complementary relation to the saving line.
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Lesson 11: Circular Flow | Unit 3: Government
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Page: 13 of 22
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Topic:
Government Purchases
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Government spending is divided into government purchases of GDP and transfer payments.- Transfer payments include welfare to the poor, unemployment compensation, and Social Security benefits.
- Transfer payments are like negative taxes, but flow from the government sector to the household sector.
- The circular tax flow is the net tax flow from households to government, taxes minus transfer payments.
- Government purchases are the green flow from the government sector to the product markets.
- As an expenditure on GDP, government purchases are comparable to consumption by the household sector and investment by the business sector.
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VERIFICATION The hypothesis-testing step of the scientific method in which the hypothesized implication of a theory is compared against real world events and data. This verification can provide support or refutation of the hypothesis. Enough support enables a hypothesis to become a principle. Refutation calls into question the theory implying the hypothesis. In either event, further analysis is indicated.
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WHITE GULLIBON
[What's This?]
Today, you are likely to spend a great deal of time at an auction hoping to buy either an extra large beach blanket or a large flower pot shaped like a Greek urn. Be on the lookout for florescent light bulbs that hum folk songs from the sixties.
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This isn't me! What am I?
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Approximately three-fourths of the U.S. paper currency in circular contains traces of cocaine.
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"You miss 100% of the shots you never take. " -- Wayne Gretzky, hockey player
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ADV FRT
Advance Freight
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