Final answer:
Personal saving is the portion of personal income that households choose to hoard rather than spend on immediate consumption. It can be viewed as the funds used to invest in capital markets or real assets like residences. Factors such as expected future income and changes in wealth or credit also influence consumption and saving patterns.
Step-by-step explanation:
Personal saving can be viewed as the portion of personal income that is used either to provide funds to capital markets or to invest in real assets such as residences. It refers to the amount of income that households choose to hoard rather than spend on immediate consumption.
Households have various options to save, including bank accounts, bonds, stocks, mutual funds, and tangible assets like housing. When choosing to save, households analyze the expected rate of return, the risk associated with the investment, and the liquidity of the investment.
Factors such as expected future income and changes in wealth or credit also influence household consumption and saving patterns.