To explain:
The meaning of saving and its role in financial market.
Explanation of Solution
Saving is the income which is not spent out of earnings or income. For example, Mr. P deposits $100 as his savings in the saving account in bank. This is left unspent and is called savings.
Savings done by household are considered an important source for further investment by business and government. Saving gives interest to household which is an earning for them.
Savings play a major role in financial market. There is a flow of income from savers to investment. When an individual saves some amount in bank, bank gives interest on it. Some percentage of saving is kept by bank as reserve, rest amount is lent to investors who demand capital. This is called investment.
Savings:
Saving is the income which is not spent out of earnings or income. Savings can be made to become financially stronger.
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