Answer to Question #105138 in Macroeconomics for Fatmah

Question

Discuss whether a government should encourage an increase in savings

Answer 1

Yes, rule should encourage increased savings. Using the savings of the population as an investment resource brings considerable benefits to the state.Firstly, it will reduce the dependence on foreign investment.Secondly, the population will be able to receive additional income from their savings and spend them on goods and services, this will contribute to economic growth. Thirdly, savings can be used to finance socially-oriented projects. Fourth, the savings of the population is a powerful fueling of the banking and financial-credit systems. All this ensures GDP growth.