Discuss what motives consumers have for deciding whether to spend or save. [ 6marks]

5.Discuss what motives consumers have for deciding whether to spend or save. [6marks]

There are various motive consumers have for deciding whether to spend or save. Firstly the amount of disposable income. The more income consumers have, the more he or she will be willing to spend. The same thing happens to saving also.Secondly consumers do spent for the education of their own children and relatives and on the other hand they save income for the unforeseen expenses such as accidents, sickness etc. Thirdly consumers spend more of their income if they anticipate inflation in near future in order to avoid loss in their purchasing power. On the other hand the amount of saving is very much influenced by the bank interest rates. The more the saving interest rates, the more the savings will be.