Write Short notes on: 2) Saving Function

Write Short notes on:

2) Saving Function

Answer:  The consumer does not spend the entire increase in his income on consumption. Rather, a portion (generally fixed) of the increase in income is kept as savings. Thus, as the income increases, savings also increase. This relationship between the savings and income is depicted in a functional form by the savings function. The savings function can be expressed as:

S = f(y)


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