Question

Fran buys 1,000 shares of stock issued by Miller Brewing. In turn, Miller uses the funds to buy new machinery for one of its breweries. In the terminology of macroeconomics....

a. Fran is investing; Miller is saving.

b. Fran is saving; Miller is investing.

c. Fran and Miller are both saving.

d. Fran and Miller are both investing.

Answer 1

The correct answer is letter "B": Fran is saving; Miller is investing.

Step-by-step explanation:

In Macroeconomics many points differentiate a saving from an investment. Savings are usually destined for short-term goals, allowing individuals to dispose of that money at any time. Investments are destined to be part of a long-term goal. Money cannot be cashed immediately out of investments since in most cases they are part of a production process, such as machinery in mines, for instance.

In that case, Fran is saving by buying 1000 shares of stock while Miller is investing by purchasing new machinery for one of its breweries.

Answer 2

Answer: d. Fran and Miller are both investing.

Explanation: An investment is the action of using a quantity of resources in a project or business to make a profit.

Both Fran and Miller are investing, because Fran wants to take advantage of his savings by buying the shares to make them grow and Miller wants to invest in his business, to be able to increase production or get a better result than he currently maintains.