ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -The part of income not spent is called saving. We know, income in economics is the summation of consumption expenditure and saving. Thus the part of the income which is not spent for consumption expenditure, it is known as saving.

Detailed explanation-2: -Savings refers to the part of the income which is not spent on the consumption of goods and services in the economy.

Detailed explanation-3: -Income = Consumption + Savings The largest part of total spending is consumption. C = f (Y) If income increases, consumption also increases BUT not as quickly as income. S = f (Y) If income increases, savings also increase BUT at the higher rate than income.

Detailed explanation-4: -The non-income determinants of consumption according to Keynes are: expectations, wealth, credit, taxes, and price levels.

Detailed explanation-5: -Generally, income is directly related to consumption and savings and so an increase in income will lead to an increase in consumption and savings, and a decline in income levels will lead to a decline in consumption and savings level. An increase in income leads to an increase in marginal propensity to consume.