Question

Indicate whether each of the following descriptions represents saving or investment, as defined by a macroeconomist.

Description Saving Investment
This occurs when a person or firm purchases new capital.
This occurs when a person's income exceeds his consumption.
Indicate whether each of the following situations represents saving or investment.
Which of the following situations represent saving?
A. Your family takes out a mortgage and buys a new house.
B. You use your $200 paycheck to buy stock in AT&T.
C. Your roommate earns $100 and deposits it in his account at a bank.
D. You borrow $1,000 from a bank to buy a car to use in your pizza delivery business.

Answer 1

Step-by-step explanation:

1. Investment: this occurs when a person or firm purchases new capital.

2. Savings: This occurs when a person's income exceeds his consumption.

3. The situations that represent saving are;

I. Your roommate earns $100 and deposits it in his account at a bank.

II. You use your $200 paycheck to buy stock in AT&T.