Maharashtra State Board course HSC Science (General) 12th Board Exam
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Write Answer in 'One' Or 'Two' Paragraph.What Are the Determinants of Saving Functions? - Economics

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Question

Write answer in 'one' or 'two' paragraph.
What are the determinants of saving functions?

Solution

 The saving function is primarily derived from the consumption function as the amount of saving is equal to the difference between the income and consumption expenditure. 
Following are a few determinants:

i. Motive of precaution: People save money for the future in order to meet unexpected expenditure. This effects the savings level.

ii. Motive of foresightedness: People cut down their spending in order to meet future requirements for money. For examples, requirements for higher education, marriage, buying a house etc. This increases their savings level.

iii. Motive of enterprise: People prevent current consumption and save for the purpose of investing. Under this motive, people save to invest in a profitable enterprise. 

iv. Motive of calculation: Under this motive, people save to invest in shares and debentures in order to increase their income.

  Is there an error in this question or solution?

APPEARS IN

 2012-2013 (March) (with solutions)
Question 4.1.4 | 4.00 marks
Solution Write Answer in 'One' Or 'Two' Paragraph.What Are the Determinants of Saving Functions? Concept: Function of Money - Primary Function.
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