This document discusses savings, investment, and factors that affect them. It defines savings as income not spent and notes it provides security for unexpected bills and retirement. Investment means sacrificing present money for future gains by purchasing assets. Factors influencing savings and investment are discussed, as well as India's low rates and suggestions to increase them such as expanding banks and infrastructure. The document concludes with multiple choice questions about these topics.
2. Contents
Meaning of saving
Types of saving
Factor effecting level of
saving
Meaning of investment
Importance of investment
Factors effecting of
investment
Causes of low rate of
saving & investment in India
Suggestions to increase
3. Savings are that part of our
income that we do not
spend.
S = Y - C
Savings means:
Depositing cash in a safe
place
Having minimal return and
Less risk
Short term needs &
emergencies
4. To have money available to buy something in the
future.
To have money available for unexpected bills.
To have an income when they retire.
5. Private
saving
Public saving
Private saving is the
amount of income that
households have left
after paying their taxes
and paying for their
consumption.
Public saving is the
amount of tax revenue
that the government has
left after paying for its
spending.
Y – T - C T - G
7. Investment means sacrificing some
money value in the present with the
expectation of making gains in the
future. Investment is also known as
capital formation.
Investing means:
Purchase an assets or investment
Having a potential of high return
and
High risk
Long term
8. People invest their money in different ways:
How much money do we need for the investment?
Is there a risk, i.e. could we lose our money?
How easy is it to turn our investment back into cash?
How much can we earn from our investment and is it worth
the risk?
Buying property ,
e.g. a house to rent
out
Buying stock and
shares
Setting up a new
business
11. Vicious circle of poverty
Low per capita income
Inflation & lack of demand
Lack of infrastructure
Heavy taxation
12. Expansion of banking
institutions
Reduction in import
duty for capital
goods
Promote rural
savings
Control on population
Strengthening
infrastructure
Imposing
agricultural income
tax
13. 1. When opening a restaurant you may need to by ovens, freezers,
tables, and cash registers. Economists call these expenditures
a. capital investment.
b. investment in human capital.
c. business consumption expenditures.
d. None of the above are correct.
2. When a country saves a larger portion of its GDP, it will have
a. less investment, and so have more capital and higher productivity.
b. less investment, and so have less capital and higher productivity.
c. more investment, and so have more capital and higher
productivity.
d. more investment, and so have less capital and higher productivity.
14. 3. All of the following are high-income countries except
a. Singapore
b. U.K
c. Japan
d. South Africa
4. Lucy wants to start her own psychiatric practice, but her expenditures
exceed her income. Lucy is a
a. saver who demands money from the financial system.
b. saver who supplies money to the financial system.
c. borrower who demands money from the financial system.
d. borrower who supplies money to the financial system.
5. All of the following are low-income countries except
a. United Arab Emirates.
b. Armenia.
c. Sudan.
d. Bangladesh.