AP MacroeconomicsFinancial Sector & Loanable Funds
Private Saving
The portion of disposable income that households and businesses do not spend on consumption.
It is calculated as disposable income minus consumption. Private saving is a key source of funds in the loanable funds market and contributes to national saving along with public saving. Higher private saving increases the supply of loanable funds and lowers real interest rates.
Formula / Example
Private Saving = Disposable Income - Consumption
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Loanable Funds →
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Study module
The Loanable Funds Market →
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