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FACTOR MARKET EQUILIBRIUM: Equilibrium in the factor market, which for a perfectly competitive market is achieved at the factor price and factor quantity give by the intersection of the factor demand curve and the factor supply curve. For factor markets that are not perfectly competitive, such as those controlled by monopoly or monopsony, factor market equilibrium is achieved when the controlling firm maximizes profit. For monopoly, this is the factor quantity that equates marginal revenue and marginal cost. For monopsony, this is the factor quantity that equates marginal revenue product with marginal factor cost. But regardless of marginal structure, as an equilibrium it is maintained until shocked by an external force.
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                           SAVING LINE: 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 | 
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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, http://www.AmosWEB.com, AmosWEB LLC, 2000-2025. [Accessed: March 6, 2025].
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Today, you are likely to spend a great deal of time watching infomercials wanting to buy either several magazines on fashion design or a package of 3 by 5 index cards, the ones without lines. Be on the lookout for a thesaurus filled with typos.
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