# ECN 204 Chapter 8: Chapter 8 macro.docx

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## Document Summary

Personal saving is the proportion of disposable income that is not utilized. Saving is calculated through this formula s = disposable income consumption. A direct relationship exists with disposable income and consumption where the more di there is the more consumption that takes place. The 45 degree line is a reference line where each point on the line is where consumption equals disposable income. The distance between the degree line and the horizontal line measures consumption or disposable income. Saving is the amount of money where the actual consumption in any year falls under the 45 degree line. There is a negative relationship between savings and disposable income. The consumption schedule: the consumption schedule/function portrays the amounts of income households are spending at different amounts of usable income which demonstrates the direct relationship between the two. Mpc and mps as slopes: the mpc is the slope of the consumption schedule and the mps is the slope of the saving schedule.