March 17, 2018 

AmosWEB means Economics with a Touch of Whimsy!

AmosWEBWEB*pediaGLOSS*aramaECON*worldCLASS*portalQUIZ*tasticPED GuideXtra CrediteTutorA*PLS
HOUSEHOLD: The consuming population of an economy, which pretty much includes every living, breathing human being in a nation. The key contrast here is with business, the organizations responsible for production. In terms of the circular flow, households buy production from businesses through product markets and supply resources to business through factor markets. Check out the household sector for more.

Visit the GLOSS*arama


A graphical depiction of the relation between household sector saving and income. The saving line is closely related to the consumption line that forms one of the key building blocks for Keynesian economics. A saving line is characterized by vertical intercept, which indicates autonomous saving, and slope, which is the marginal propensity to save and indicates induced saving. The injections-leakages model used in Keynesian economics is based on the saving line.
The saving',500,400)">saving line, also termed propensity-to-save line or saving function, shows the relation between saving and income for the household sector. The income measure commonly used is national income or disposable income. Occasionally a measure of aggregate production, such as gross domestic product, is used instead.

The purpose of the saving line is to graphically illustrate the basic saving-income relation for the household sector, which is the foundation of the injections-leakages model used in Keynesian economics.

Two basic types of saving are indicated by the saving line. Autonomous saving is the vertical intercept, or Y-intercept, of the saving line. Induced saving is the slope of the saving line. Of no small importance, the slope of the saving line is also the marginal propensity to save (MPS).

Saving Line
Saving Line

A representative saving line is presented in the exhibit to the right. This red line, labeled S in the exhibit is positively sloped, indicating that greater levels of income generate greater saving by the household sector. This positive relation corresponds to the fundamental psychological law of Keynesian economics.

The two primary characteristics of the saving line are slope and intercept:

  • Slope: The slope of the saving line presented here is positive, but less than one. In fact, the slope of the saving line is numerically equal to the marginal propensity to save. In this case the slope is equal to 0.25. The positive slope reflects induced saving--more income means more saving. It also reflects the basic Keynesian psychological law. Click the [Slope] button to illustrate.

  • Intercept: The saving line intersects the vertical axis at a value of -$1 trillion. This intersection indicates autonomous saving--saving unrelated to income. Autonomous saving is usually negative, indicating dissaving. This occurs because autonomous consumption is positive. Click the [Intercept] button to illustrate.
Note that the level of income (and production) generated by full employment of resources is NOT indicated in this exhibit. Full employment could correspond with $2 trillion of income or $20 trillion. There is no way of knowing. This is particularly important when injections-leakages model, used to identified equilibrium, is derived based on the saving line.


Recommended Citation:

SAVING LINE, AmosWEB Encyclonomic WEB*pedia,, AmosWEB LLC, 2000-2018. [Accessed: March 17, 2018].

Check Out These Related Terms...

     | saving schedule | saving function | induced saving | autonomous saving | average propensity to save | marginal propensity to save | consumption line | derivation, saving line | slope, saving line | intercept, saving line | effective demand | psychological law |

Or For A Little Background...

     | saving | consumption | consumption expenditures | Keynesian economics | macroeconomics | household sector | disposable income | national income | gross domestic product |

And For Further Study...

     | personal consumption expenditures | induced expenditures | autonomous expenditures | aggregate expenditures | aggregate expenditures line | derivation, consumption line | consumption expenditures determinants | Keynesian model | Keynesian equilibrium | injections-leakages model | aggregate demand | paradox of thrift | fiscal policy | multiplier |

Search Again?

Back to the WEB*pedia


[What's This?]

Today, you are likely to spend a great deal of time flipping through the yellow pages wanting to buy either a velvet painting of Elvis Presley or a wall poster commemorating yesterday. Be on the lookout for bottles of barbeque sauce that act TOO innocent.
Your Complete Scope

This isn't me! What am I?

The word "fiscal" is derived from a Latin word meaning "moneybag."
"If football taught me anything about business, it is that you win the game one play at a time."

-- Fran Tarkenton, Football Player

Bell Journal of Economics
A PEDestrian's Guide
Xtra Credit
Tell us what you think about AmosWEB. Like what you see? Have suggestions for improvements? Let us know. Click the User Feedback link.

User Feedback

| AmosWEB | WEB*pedia | GLOSS*arama | ECON*world | CLASS*portal | QUIZ*tastic | PED Guide | Xtra Credit | eTutor | A*PLS |
| About Us | Terms of Use | Privacy Statement |

Thanks for visiting AmosWEB
Copyright ©2000-2018 AmosWEB*LLC
Send comments or questions to: WebMaster