Q.

Forced Savings refer to -

A. Reduction of consumption consequent to a rise in prices
B. Taxes on individual income and wealth
C. Compulsory deposits imposed on income tax payers
D. Provident fund contribution of private sector employees
Answer» A. Reduction of consumption consequent to a rise in prices
Explanation: Forced saving is an economic situation in which consumers spend less than their disposable income, not because they want to save but because the goods they seek are not available or because goods are too expensive. In a free economy, this situation would normally result in increase in prices and inflow of more goods.
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