Question

What do you mean by a propensity to save?

What is a saving function (propensity to save)?

What is propensity to save or saving function?

What do you understand by propensity to save (saving function)?

Answer 1

• Thus, the consumption function measures not only the amount spent on consumption but also the amount saved.
• This is because the propensity to save is merely the propensity not to consume.
• The 45° line may therefore be regarded as a zero-saving line, and the shape and position of the C curve indicate the division of income between consumption and saving.
  Thus: S = f(Y)
  Where S indicates total savings, Y is the level of income and indicates function.