Commentary In the National Income and Product Accounts (NIPA), savings are established as the difference between disposable money income and monetary outlays. Disposable income is defined as the summation of all personal money income less tax payments to the government. Personal income includes wages and salaries, transfer payments, income from interest and dividends, and rental income. The NIPA framework is based on the Keynesian view that spending by one individual becomes part of the income of another individual. The spending of the purchaser is the income of the seller. From this, it follows that spending equals income. So if people maintain their spending, this keeps overall income coming in. Now, an increase in the supply of money affects the total amount of money spent. Consequently, the greater the expansion in the money supply, all other things being equal, the more money is going to be spent and therefore the greater the …
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