a) Disposable income

a) disposable income and its influence on consumer spending

b) an understanding of the relationship between savings and consumption

disposable income = the income left over after direct taxes have been paid and transfer payments have been received

direct taxes increase = disposable income decreases

transfer payments increase = disposable income increases

disposable income decreases = consumption decreases

disposable income increases = consumption increases

disposable income is saved = consumption decreases

disposable income is spent = consumption increases

economic decline = savings increase

economic growth = savings decrease