savings schedule

Fig. 174 Savings schedule.

savings schedule

a schedule that depicts the relationship between SAVINGS and the level of INCOME. In the simple CIRCULAR FLOW OF NATIONAL INCOME, all consumption and saving is accounted for by households. At low levels of DISPOSABLE INCOME, households consume more than their current income (see DISSAVINGS). At higher levels of disposable income, they consume only a part of their current income and save the rest, as in Fig. 174. Thus, the savings schedule is derived by subtracting the CONSUMPTION SCHEDULE from the 45-degree line, as shown in the lower part of the figure. The slope of the savings schedule is equal to the MARGINAL PROPENSITY TO SAVE. See also LIFE-CYCLE HYPOTHESIS, PERMANENT-INCOME HYPOTHESIS.