A Research Study On Consumption And Saving - 1884 Words

CHAPTER 1 AN INTRODUCTION TO RESEARCH METHODOLOGY 1.1 Statement of the Research Problem Consumption and saving play an important role in the world economy and what determines consumption and saving is income. As Keynes pointed out, â€Å"When individuals are saving their money, they are actually hurting the economy because saving reduces â€Å"aggregate demand† and thus reduces company revenue†. From this study, it is seen that one’s expenditure becomes another’s income. On the other hand, saving is also important because of future consumption which has to be maintained for meeting any kind of emergency or to be able to face any level of risks and uncertainties. For this very reason precautionary saving has become very essential for migrants since migrants face higher risks and uncertainties than the local people who do not have to worry so much about their future. In today’s scenario, the study shows that with increase in migration, there is an increase in the total spending within the economy which leads to an increase in the supply of labour and increase in demand. Therefore, an increase in spending within the economy brings about an increase in the GDP. Generally individuals or households look at the prices of the products and the quality before making a purchase because price of commodities determines their consumption behaviour. How much they save depends on how much they earn and how much they consume. Consumption and saving behaviour differ from place to place. A personShow MoreRelatedThe Cost Of Health Care Services Essay1498 Words   |  6 PagesThe LCH model posits that people save when income is greater than the resources needed to meet current consumption and that people borrow when income is insufficient. 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