JiTT 8

Determinants That Can Shift the Supply and Demand Curves for Savings

There are various factors that can influence both demand and supply curves for the savings. Some of these determinants entail discipline, willingness to reduce expense, a good saving plan, a convenient place to save and the amount of interests earned on the savings among many more others.

The idea of savings affects the demand and supply curves as dictated by various determinants. In the first place, willingness to reduce expenses comes into play in which it influences the demand curve. In the savings graph in which consumption is plotted against the gross income, it will be noted that this factor lowers the consumption for the particular person. The same case applies to discipline of the individual in which he or she should have a good savings plan (Ahern 761). Primarily, the three factors influence the demand curves for the savings since they are the in drives of the party under consideration. In the case of the supply curve, various factors also come into play. The amount of interest earned on saving is one of the factors in this case along with the availability of an opportunity to earn more income in due course. Consequently, a safe place to keep savings alongside a convenient place to save them also plays an instrumental role. Ideally, this presence of the avenues boosts the supply curve as they attract many people to engage in savings.

To conclude, savings obey the concept of demand and supply curves through various determinants. Some of these determinants encompass willingness to reduce expenses, the discipline of the person under consideration, presence of a safe place to keep savings, the potential to earn more income and interest among many more others.

Work Cited

Ahern, Kenneth R. «Do common stocks have perfect substitutes? Product market competition and the elasticity of demand for stocks.» Review of Economics and Statistics 96.4 (2014): 756-766. Print.