In the actual economy,households

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Households typically divide their income among spending on goods and services, taxes, and savings. This is known as the household budget constraint and reflects the fact that households must allocate their income in such a way that their total spending does not exceed their total income. While households do not necessarily buy all of the goods and services produced in the economy, they are a major source of demand for these goods and services, and their spending decisions can have a significant impact on economic activity. Households also do not necessarily spend all of their income, as they may choose to save some portion of it for future use.

In the Actual Economy,households