In the calculation of the savings ratio, savings is defined as:

Question

Quizplus · Accepted Answer

The savings ratio is calculated by dividing the amount of savings by income. Savings, in this context, is defined as the amount left over after deducting expenditure from income, but also after adding back items that may be regarded as an investment, such as contributions to a retirement account. Option A is partially correct, but it does not take into account investment items that may still be considered savings. Option B is incorrect as it only considers the funds on deposit at a bank and does not take into account other investments or savings. Therefore, option C is the best choice.

In the Calculation of the Savings Ratio, Savings Is Defined