Question

Analysis the motives that might cause a person to safe rather than to spend

Answer 1

There are various factors which results people to save rather than spend. First and the most important motive are the bank interest rates on saving. If bank gives very high rates of interest on savings, then more people will be willing to save because the return on savings will be higher than the return on spending. Secondly, if a person has planned to buy expensive luxuries in a near future, he might not spend his income, rather he will also be saving his income for this luxury item. Thirdly, increase in income and wealth is also an important influence on saving. It is true that increase in income increases spending but the same rule happens for savings also especially when the rate of inflation is high.