Question

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

Jacques takes out a loan and uses it to build a new cabin in Montana.
Darnell purchases a corporate bond issued by a car company.
Eleanor purchases new ovens for her cupcake-baking business.
Kyoko purchases stock in NanoSpeck, a biotech firm.

Answer 1

The correct answer is:

A) Investment

B) Saving

C) Investment

D) Saving

Step-by-step explanation:

On the macroeconomic approach, investment is the acquisition of an asset with the purpose of getting a benefit from it in the short or long term. It is part of a production process normally or sometimes it plays the role of the production itself. A saving, on the other hand, takes place where money not being used is spent in assets that can provide benefits in the long-term, normally. In that sense,

A) Jacques takes out a loan and uses it to build a new cabin in Montana. (Investment)

B) Darnell purchases a corporate bond issued by a car company. (Saving)

C) Eleanor purchases new ovens for her cupcake-baking business. (Investment)

D) Kyoko purchases stock in NanoSpeck, a biotech firm. (Saving)