The Consumption Possibility Line represents the maximum amounts of consumption possible at varying levels of disposable income, or of Gross Domestic Product (GDP).
Discretionary income is the amount of spendable income remaining after the purchase of physical necessities, such as food, clothing, and shelter, as well as the payment of taxes. Marketers of goods other than necessities compete for the consumer's discretionary dollars by appealing to various psychological needs, as distinguished from physical needs.
Disposable income is the amount of money that individuals have available for spending and saving after personal taxes have been accounted for.
Dissaving, or negative saving, occurs when consumer spending exceeds disposable income, often financed through accumulated savings or loans.
The proportion of additional income that a consumer or economy will consume rather than save, expressed as a decimal or fraction.
Savings refer to the amount of disposable income that is not spent on consumption. The percentage of gross income that is saved defines the savings rate, a key indicator of economic health.
The savings ratio, also known as the savings rate, is a financial metric that measures the proportion of disposable income that individuals or households save rather than spend on consumption. This ratio is typically expressed as a percentage and reflects the preference balance between present and future consumption.
Spendable income, also known as after-tax cash flow, refers to the amount of money an individual or business has available to spend after all taxes have been deducted from their gross income.
