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DEFINITIONS

Savings ratio

Definition

The savings ratio is an economics term that refers to the proportion of income which is saved, usually expressed for household savings as a percentage of total household disposable_income. It can be calculated gross or net, when calculated net, a deduction is made for the depreciation of fixed assets. The ratio differs considerably over time and between countries. The savings ratio is dependant on: The proportion of older people, as they have less motivation and capability to save; the tax system, it can encourage or discourage saving; the rate of inflation, expectations of rising prices encourage people to spend now.



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