Post on 18-Jul-2015
ContentsMeaning of saving
Types of saving
Factor effecting level ofsaving
Meaning of investment
Importance of investment
Factors effecting ofinvestment
Causes of low rate ofsaving & investment in India
Suggestions to increasethe rate of savings andinvestment in India
Savings are that part of our income that we do not spend.
S = Y - CSavings means:Depositing cash in a safe
placeHaving minimal return andLess risk Short term needs & emergencies
To have money available to buy something in the future.
To have money available for unexpected bills.
To have an income when they retire.
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
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
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
Increase in demand &
supply
Technical progress
Creation of infrastruct
ure
Economic welfare
Increase in employment
Rate of interestGovernment
policies
Government spending on
infrastructure
Research & technological advancements
Banking facilitiesTax incentives
on saving
Vicious circle of poverty
Low per capita income
Inflation & lack of demand
Lack of infrastructure
Heavy taxation
Expansion of banking institutions
Reduction in import duty for capital
goods
Promote rural savings
Control on populationStrengthening infrastructure
Imposing agricultural income
tax
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.
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.