The concept of 'Precautionary Saving' arises because: MCQ with Answer and Explanation

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The concept of 'Precautionary Saving' arises because:

A. Individuals save more when future income is uncertain

B. Only permanent income matters

C. Individuals save only for retirement

D. Saving is independent of uncertainty

Answer: Option A

Solution (By JKSSB Mock Tests)

Precautionary saving is additional saving undertaken by risk-averse agents to buffer against future income or expenditure uncertainty.

This question belongs to: Economy GK Economy Set 1

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Practice More Economy Set 1 Questions

Question #1

The 'errors and omissions' item in the balance of payments is used to:

A. show foreign exchange reserves

B. show exports

C. balance the statistical discrepancies

D. show imports

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Correct Answer: Option C

Explanation:
Errors and omissions balance statistical discrepancies so the BoP accounts sum to zero.

This question belongs to: Economy GK Economy Set 1

Question #2

The term 'Fiscal Consolidation' refers to:

A. Only increasing tax rates

B. Only printing more money

C. Policies aimed at reducing fiscal deficit and public debt

D. Increase in government expenditure without regard to revenue

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Correct Answer: Option C

Explanation:
Fiscal consolidation refers to policies and measures undertaken to reduce the fiscal deficit and put public finances on a sustainable path.

This question belongs to: Economy GK Economy Set 1

Question #3

Which of the following is NOT a source of agricultural finance in India?

A. Cooperative societies

B. Commercial banks

C. Stock exchanges for small farmers

D. NABARD

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Correct Answer: Option C

Explanation:
Stock exchanges primarily serve corporate entities. Agricultural finance is provided by commercial banks, cooperatives, RRBs and refinanced by NABARD.

This question belongs to: Economy GK Economy Set 1

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