Final Answer:
This statement is B) False because an economic agent can have positive savings and still be a deficit spending unit due to the distinction between savings and investments.
Step-by-step explanation:
An economic agent can have positive savings and still be a deficit spending unit. This may seem counterintuitive, but it's possible when considering the distinction between savings and investments. Savings represent the portion of income not spent, while investments involve allocating saved funds into assets or expenditures. Therefore, an economic agent can have positive savings but be a deficit spender if their investments or expenditures exceed their savings.
Firstly, savings are calculated as the difference between income (Y) and consumption (C), expressed as S = Y - C. If an economic agent has positive savings (S > 0), it implies that their income exceeds their consumption, indicating a surplus. However, this does not necessarily mean they are not engaging in deficit spending. The critical factor lies in the relationship between savings and investments.
Secondly, deficit spending occurs when an economic agent's total spending (including investments) exceeds their income. Mathematically, deficit (D) is represented as D = Y - (C + I), where I is the investment. Even if an agent has positive savings (S > 0), if investments (I) are substantial, they can still be in a deficit position. In such cases, the economic agent is relying on borrowed funds or other sources to cover the deficit.
In conclusion, the final answer is False. An economic agent with positive savings can still engage in deficit spending if their investments or expenditures surpass their savings, highlighting the importance of considering the broader context of financial activities.