Question

3. The meaning of saving and investment 

Classify each of the following based on the macroeconomic definitions of saving and investment. 

	Saving	Investment
Frances purchases stock in NanoSpeck, a biotech firm.
Antonio buys a government bond.
Dmitri takes out a loan and uses it to build a new cabin in Montana.
Caroline buys new bulldozers for her construction firm.

Answer 1

1-frances purchase stock in Nanospeck ,a biotech firm is saving because when he purchased stock then he reserve that stock in some time so this is his savings

2-antino buys a government bonds is saving because when he purchased a bond then he pay money to bank which is his savings

3-Dmitri takes out a loan and uses it to build a new cabin in Montana is the investment because the goal of this is to produce something whatever he want.

4-caroline buys new bulldozers for her construction is investment because as he buys bulldozers then by the help of bulldozers she made work in the construction firm and may be generate money.

Answer 2

National saving is what's left over after you subtract household consumption and government spending from the economy's total income. At the household level, saving is what's left over after subtracting taxes paid and consumption from household income. Depositing unspent income in a bank is an act of saving, as is using unspent income to purchase stocks or bonds.

Investment is spending on new capital, such as machines, equipment, tools, or buildings. Also note that spending on new residences is the one component of household expenditures that counts toward investment spending, rather than consumption, in national income accounting.