Recent economic reports suggest that rising inflation has significantly squeezed household budgets. Despite a period of historically resilient spending, the country's savings ratio has started to climb as households prepare for leaner times. A contraction in real disposable income has dampening effects on consumer confidence, leading families to postpone major purchases of durable goods. Policy proposals to stimulate economic activity include a temporary cut to employee national insurance contributions, which proponents argue will immediately boost disposable income and jump-start consumption.
Define the term 'disposable income' (Extract H).
222 exam-style questions on AQA A Level Economics 2.2 How the macroeconomy works: the circular flow of income, aggregate demand/aggregate supply analysis and related concepts, covering 2.2.1 The circular flow of income, 2.2.2 Aggregate demand and aggregate supply analysis, 2.2.3 The determinants of aggregate demand, 2.2.4 Aggregate demand and the level of economic activity, 2.2.5 Determinants of short-run aggregate supply, and 2.2.6 Determinants of long-run aggregate supply. Each one has a worked solution and a mark scheme showing where the marks go.