Definition – What is the savings function?
The savings function describes the relationship between income and consumption. It is paired with the consumption function.
Formula – How to calculate the savings function
Savings = Total Income – Consumption
In a country, total income is $600,000 and consumption is $100,000.
Savings = $600,000 – $100,000 = $500,000
Therefore, savings is $500,000.
Source and more resources
- BYU Idaho – Econ 151 Economic Principles and Problems – Macro – Basic Macroeconomic Relationships – Part of a larger macroeconomics course, this page describes basic relationships in macroeconomics, including the savings function.
- lostmy1 (YouTube) – Savings Function – an overview video of the savings function and how it is calculated.
- Businestopia – Saving Function – A description of the savings function. Includes formulas and graphs.