Surplus Spending Unit

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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RELATED FAQS
  1. For what purpose is the consumer surplus figure used?

    Understand who uses the consumer surplus figure and why it's used. Learn why companies want to minimize consumer surplus ... Read Answer >>
  2. What is the difference between consumer surplus and economic surplus?

    Learn the difference between consumer surplus and economic surplus, how the concepts are related and the important theoretical ... Read Answer >>
  3. Why are economists interested in the consumer surplus?

    Understand why an economist would be interested in consumer surplus. Learn why an economy would want to maximize consumer ... Read Answer >>
  4. What's does the current account have to do with the trade balance?

    Learn how a nation's trade balance is factored into its current account, and the differences between these two common terms. Read Answer >>
  5. What's the difference between economic value added (EVA) and producer surplus?

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