Test Preparation on SBI-Banking and Public Finance


One of the following is not a financialsaving

The part of the income thathas been saved constitutes savings in aneconomy.Savings flow to the capital market. From thecapital market, these flow to the firm sectorin the form of loans and borrowings. Firmsmake use of this money to purchase capitalgoods like machinery, buildings, equipment,tools, etc. Capital goods help in furtherproduction of goods and services.Expenditure on capital goods constitutesinvestment in an economy.The expenditure on purchase of financialassets like equity, units, deposits, etc., doesnot constitute investment.Thus, investment represents that part of totalproduction (and thus that part of total incomegenerated) in an economy which is used forthe purchase of capital goods.The arithmetic equation in this context,which is always true, is:I = S
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