In basic macroeconomics, saving is defined as that portion of money income which is ________ by households.

Introduction / Context:
Saving and consumption are two key concepts in macroeconomics that describe how households use their income. Understanding the precise definition of saving is important for analysing investment, growth and financial stability in an economy. This question asks you to identify how saving is defined in terms of money income and household spending behaviour.

Given Data / Assumptions:

• Households receive a certain amount of money income in a period.
• They can either spend that income on consumption or keep it aside as saving.
• Consumption includes spending on all goods and services used to satisfy current needs and wants.
• Saving is the part of income not used for current consumption.

Concept / Approach:
In simple macroeconomic models, the identity is often written as: Income = Consumption + Saving This means that once taxes and transfers are accounted for, whatever is not spent on consumption becomes saving. Saving can be held as cash, bank deposits, financial assets or invested in physical capital, but the key point is that it is not spent on current consumption goods and services. The definition does not restrict saving to any particular purpose such as industrial development or education; it simply focuses on the part of income that is not consumed now.

Step-by-Step Solution:
Step 1: Recall the basic macroeconomic identity linking income, consumption and saving. Step 2: Understand that consumption refers to actual spending on goods and services for current use. Step 3: Recognize that saving is defined residually as income minus consumption. Step 4: Match this understanding to the option that describes saving as the portion of income not spent on consumption.

Verification / Alternative check:
You can verify by thinking of a simple numerical example. Suppose a household has a monthly income of 30,000 rupees and spends 24,000 rupees on food, rent, transport, clothing and other consumption. The remaining 6,000 rupees is saving, regardless of whether it is later used to buy shares, fixed deposits or future education. This clearly fits the definition “not spent on consumption”, confirming the correct option.

Why Other Options Are Wrong:
Spent for development of industries: Funds used to directly develop industries are usually called investment, not saving by itself. Saving may finance investment, but saving is defined more broadly as what is not consumed.
Spent on health and education only: Spending on health and education is typically treated as consumption or at most human capital investment, but it is still spending, so it is not saving in the strict macroeconomic sense.
Spent for consumer durables: Buying consumer durables like TVs, refrigerators or vehicles is categorised as consumption expenditure on durable goods. It does not match the definition of saving, which is income not spent.

Common Pitfalls:
A common misunderstanding is to treat any expenditure that seems “useful” or “productive” as saving. However, saving is not about whether spending is wise or foolish; it is about whether income is spent now or kept aside for the future. Another pitfall is to confuse saving with investment; saving provides the funds that can be invested, but the two concepts are not identical in macroeconomic accounting.

Final Answer:
Saving is that portion of money income which is not spent on consumption.