Explain: How can you spend more money than you earn? Be Specific!

Financial Lit Class.

Discretionary income is the amount of an individual's income that is left for spending, investing, or saving after paying taxes and paying for personal necessities, such as food, shelter, and clothing. Discretionary income includes money spent on luxury items, vacations, and nonessential goods and services.

Production possibilities frontier.

This is generally represented on a graph and shows the maximum possible output for 2 good or services when all resources are used up efficiently, so you can compare what you are giving up in one good in order to achieve more of the other (opportunity cost).