A) Risk retention and reduced consumption
B) Gifting and accumulation
C) Spending and accumulation
D) Postponement of consumption and parting with liquidity
✅ ANSWER: D
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.
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.