What's it: Disposable income is the money you have left after paying taxes. You can use it for savings or buy goods and services. Disposable income is essential to describe household purchasing power. When it increases, we expect households
Fiscal Multiplier
Balanced Budget Multiplier: Meaning, How It Works
A balanced budget multiplier measures changes in aggregate output when the government changes its spending and taxes at an equivalent rate. In a closed economy, a multiplier is equal to one, which means that the multiplier effect of a change in tax
Fiscal Multiplier: Meaning, Formula, Criticisms
Fiscal multiplier represents the magnitude of the impact of fiscal stimulus on economic output. The initial stimulus for expenditure usually results in a higher final increase in the gross domestic product (GDP). For example, when consumption
Marginal Propensity to Save: Meaning, Formula, Effects to The Economy
Marginal propensity to save (MPS) is defined as a portion of the additional income that households save. We calculate it by dividing the change in savings to the change in disposable income. Formula for marginal propensity to save Before
Marginal Propensity to Consume: Meaning, Formula, Determinants
The marginal propensity to consume (MPC) is the portion of the additional disposable income that consumers spend on goods and services. We calculate it by dividing the change in consumption expenditure to the change in disposable income. Formula