Economics Today and Tomorrow, Student Edition
1st Edition
ISBN:9780078747663
Author:McGraw-Hill
Publisher:McGraw-Hill
Chapter6: Saving And Investing
Section6.1: Why Save?
Problem 3R
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Question
What is private saving?
Expert Solution
Step 1
Private savings are the amount left with the household after spending money on taxes and consumption. In other words, it is the amount available for investment to the households after paying for their consumption and taxes.
Step 2
Formula:
where,
S=Savings
Y=Income
T=Taxes
C=Cosnumption
TR=Transfer payments
Note: Transfer payments are received by the households from the government that is why it is added.
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