Q402
Savings can be considered as a composite of two decisions. Choose them from the list below.
A.
Risk retention and reduced consumption
B.
Gifting and accumulation
C.
Spending and accumulation
D.
Postponement of consumption and parting with liquidity
AnswerAnswer: Option D
Solution
Answer: Option D
Solution:
Savings can be considered as a composite of Postponement of consumption and parting with liquidity. Postponement of consumption: an allocation of resources between present and future consumption.
Parting with liquidity (or ready purchasing power) in exchange for less liquid assets. For instance, purchase of a life insurance policy implies exchanging money for a contract which is less liquid.