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Questions and Answers
Which of the following is an example of saving?
Which of the following is an example of saving?
- Paying off a loan
- Spending money on luxury items
- Reducing recurring costs (correct)
- Investing in stocks
What is the meaning of the word 'Credit'?
What is the meaning of the word 'Credit'?
- To spend money
- To invest
- To lend money
- To trust or believe (correct)
Which of the following is NOT a reason to save?
Which of the following is NOT a reason to save?
- For spending on luxury items (correct)
- For emergencies
- For retirement
- For education
Which of the following is an element of credit/lending policy?
Which of the following is an element of credit/lending policy?
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What does the term 'deferred consumption' mean?
What does the term 'deferred consumption' mean?
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Study Notes
Saving and Credit
- Saving involves setting aside a portion of one's income for future use, such as building an emergency fund, retirement, or large purchases.
- Credit refers to the ability to borrow money or access goods and services with the promise to pay later, often with interest or fees.
Reasons to Save
- NOT saving for impulsive or luxury purchases, as this is not a responsible or prudent use of one's income.
Credit/Lending Policy
- One element of credit/lending policy is the interest rate, which is the percentage of the borrowed amount charged as interest over a specific period.
Deferred Consumption
- Deferred consumption means sacrificing current consumption or spending in order to save for future needs or goals, such as retirement, education, or a down payment on a house.
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