Chapter 6, Problem 19AA

To determine

To analyze:The short-terms goals of savings.

Explanation of Solution

Savings can be defined as the amount of income left after consuming commodities and services. Savings are used to fulfill the short-term and long-run goals.

Short-term goals are something that an individual wants to do in near future. The short-term saving goals can include savings done for the payment of rent or student loans, personal consumption goods, traveling, weddings, etc.

The typical way in which short-term savings, to purchase portable MP3 players can be done by cutting down unnecessary or extra expenses. One can also do savings by putting money in the bank for the short-term so that the interest rate paid on it plus the principle amount will help a person to purchase commodities like a portable MP3 player.