Surplus Spending Unit

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DEFINITION of 'Surplus Spending Unit'

An economic unit with income that is greater than or equal to expenditures on consumption or real investment over the course of a period. A surplus spending unit will use its additional income to buy goods, invest, lend money to deficit spending units or pay off its own deficit from an earlier period.

BREAKING DOWN 'Surplus Spending Unit'

Basically, a surplus spending unit earns more than it spends. Surplus spenders can be individuals, sectors, countries or even the whole economy.

The household sector usually represents a surplus spending unit, as this sector earns large portions of disposable income. Most households earn more income than necessary to purchase food, shelter and other basic necessities. As a result, they are able to purchase additional consumer products, hold money in banks, or invest in the stock market.

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