Foundations of Economics (8th Edition)
Foundations of Economics (8th Edition)
8th Edition
ISBN: 9780134486819
Author: Robin Bade, Michael Parkin
Publisher: PEARSON
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Chapter 30, Problem 1SPPA
To determine

To calculate:

The level of consumption expenditure at each level of disposable income, to identify over what range of disposable income is there dissaving and to estimate the level of disposable income as which saving is zero.

Expert Solution & Answer
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Explanation of Solution

Dissaving occurs when the disposable income is zero, since the individual does not have income for their expenditure on goods and services, as a result the individual will not save a single percentage of dissaving. They are able to spend on goods and services by borrowing or purchasing goods on credit. Savings are zero when the disposable income accounts to $25 trillion, that is, in between $20 trillion and $30 trillion where disposable income equals consumption expenditure, savings account to zero.

Disposable IncomeSavingConsumption Expenditure
0-55
10-37
20-119
30129
40337
50545
Economics Concept Introduction

Disposable income:

Disposable income is the level of income that is available for individuals to spend on goods and services after deducting mandatory taxes, interests and social securities.

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