Multiple choice

Many times we read in financial newspapers/magazines and journals that Govt. is making efforts to inculcate habit of saving amongst the people. What is the correct definition of 'saving'?

  1. This is the difference between the total income of an individual after deduction of all taxes and dues levied by the Govt. authorities.
  2. This is the difference between aggregate income and aggregate consumption by an individual.
  3. This is the amount which every individual has to keep in his/her bank account as the minimum balance.

  1. Only 1

  2. Only 2

  3. Only 3

  4. Both 1 and 3
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

In economics, saving is defined as the difference between aggregate income and aggregate consumption (Statement 2 correct). Statement 1 is incorrect as it defines disposable income, not saving. Statement 3 is incorrect as it describes minimum balance requirements, not saving. Saving is what remains after consumption, not after taxes or minimum balance rules.

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