A nation that engages in precautionary savings is:

Question

Quizplus · Accepted Answer

Precautionary savings involve setting aside money or assets as a contingency plan for future events such as an economic downturn or emergency. Storing foreign currency reserves, bonds, or deposits to use in case of persistent deficits is a form of precautionary savings. A is incorrect because it refers to a specific purpose for savings rather than a general approach. C is incorrect because saving is a necessary component of investment, and investing without saving first can result in financial instability. D is incorrect because it refers to a specific policy rather than a general approach.

A Nation That Engages in Precautionary Savings Is