Bob decides to save more because he has heard rumours that his employer will be merging with another firm and many employees may lose their jobs.This is an example of the ________ motive for saving.

Question

Quizplus · Accepted Answer

The precautionary motive for saving arises when individuals want to set aside a certain amount of money to use in case of unforeseen events such as job loss, illness, or emergencies. In this scenario, Bob is increasing his savings because he anticipates the possibility of losing his job, which is a precautionary motive. Life-cycle savings refer to saving for expected events such as retirement, while public and private savings refer to saving for the benefit of society or for personal enjoyment, respectively. Bequest savings are for leaving an inheritance. None of these motives fit the scenario given.

Bob Decides to Save More Because He Has Heard Rumours