propensity to save

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The proportion of disposable income which individuals do not desire to spend on consumption. The average propensity to save gives total desired saving as a proportion of total disposable income; the marginal propensity to save is the proportion of additional income an individual desires to save. The sum of the propensity to save and the propensity to consume, average or marginal, is always 1. The size of the average and marginal savings propensities may be affected by factors such as a person's total assets, liquidity, and expectations of inflation.

Subjects: Economics.

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