%ΔI refers to the percentage change in income. It measures how much an individual's or a country's income has changed over a specific period of time.
Think of %ΔI as a growth chart for your income. Just like how you measure your height and see how much it has changed over time, %ΔI measures the change in your income.
Disposable Income: Disposable income is the amount of money that individuals have available to spend or save after taxes and other mandatory deductions are taken out. It is directly related to %ΔI because any changes in disposable income will affect the percentage change in overall income.
Personal Savings Rate: The personal savings rate is the percentage of disposable income that individuals save rather than spend. It is indirectly related to %ΔI because if people save more, their spending may decrease, resulting in a smaller percentage change in overall income.
Aggregate Demand: Aggregate demand represents the total amount of goods and services demanded by all sectors of an economy at different price levels. Changes in %ΔI can impact aggregate demand since higher incomes often lead to increased consumer spending, which drives up demand for goods and services.
Study guides for the entire semester
200k practice questions
Glossary of 50k key terms - memorize important vocab
© 2024 Fiveable Inc. All rights reserved.
AP® and SAT® are trademarks registered by the College Board, which is not affiliated with, and does not endorse this website.