personal savings ratio

personal savings ratio

the proportion of households‘DISPOSABLE INCOME that is SAVED. Savings ratios can vary over time, depending upon households’ confidence about their future employment prospects and their WEALTH, although contractual saving through insurance and pension contributions tends to be more stable. In the CIRCULAR FLOW OF NATIONAL INCOME, increases in the personal savings ratio will cause consumption spending to fall, and unless this is offset by an increase in investment spending or net exports, AGGREGATE DEMAND will decline.

See SAVING RATIO.

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