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SAVING: The after-tax disposable income of the household sector that is not used for consumption expenditures. In general terms, saving is the use of income to purchase legal claims through financial markets rather than the direct purchase of physical goods and services. In the macroeconomic world modeled by the circular flow, saving is the diversion of household income away from consumption and into the financial markets. In this model, saving is a primary source of funds used for business investment expenditures for capital goods. Saving is also used to finance government expenditures.
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Lesson 11: Circular Flow | Unit 1: Basic Flow
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Page: 6 of 22
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- The circular flow model, which is the continuous production and consumption interaction among the four major sectors-household, business, government, and foreign-- that takes place through the three aggregated macroeconomic markets--product, factor and financial.
- The basic role of the sectors--household, business, government and foreign--of the economy.
- The three aggregated markets: (a) Product markets: All markets in the economy that exchange final goods and services. (b) Factor markets: All markets that exchanges the services of the economy's labor resources. (c) Financial markets: All markets that trade financial instruments.
- The physical flow, which is the counter-clockwise flow of resources from the household to the business sector and of production from the business to the household sector.
- The payment flow, which is the clockwise flow of payment for resources purchased by the business from the household sector and of payment for production purchased by the household to the business sector.
- The continuous circular flow of payments: GDP used for factor payments, which becomes national income, which is used for consumption to buy GDP.
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DEMAND DECREASE A decrease in the willingness and ability of buyers to purchase a good at the existing price, illustrated by a leftward shift of the demand curve. A decrease in demand is caused by a change in a demand determinant and results in a decrease in equilibrium quantity and a decrease in equilibrium price. A demand decrease is one of two demand shocks to the market. The other is a demand increase.
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RED AGGRESSERINE
[What's This?]
Today, you are likely to spend a great deal of time browsing through a long list of dot com websites hoping to buy either a rim for your spare tire or decorative celebrity figurines. Be on the lookout for spoiled cheese hiding under your bed hatching conspiracies against humanity.
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This isn't me! What am I?
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A half gallon milk jug holds about $50 in pennies.
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"Expect people to be better than they are; it helps them to become better. But don't be disappointed when they're not; it helps them to keep trying." -- Merry Browne, Author
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TI
Taxable Income
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