Answered: What is private saving?

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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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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