Question

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

Saving Investment
a. Susan purchases stock in Pherk, a pharmaceutical company.
b. Megan buys new bulldozers for her construction firm.
c. Larry purchases a certificate of deposit at his bank.
d. Raphael takes out a mortgage for a new home in Detroit.

Answer 1

• a. Susan purchases stock in Pherk, a pharmaceutical company. -- Investment
• b. Megan buys new bulldozers for her construction firm. -- Investment
• c. Larry purchases a certificate of deposit at his bank. -- Saving
• d. Raphael takes out a mortgage for a new home in Detroit. -- Saving

Step-by-step explanation:

• The investment is a what is spent on the goods and services that are not consumed but are durable and the savings are what is left over after the national incomes are spent on the consumption of the goods and the services and an purchase of stock.

• the buying of the construction firm is a type of investment and the purchase of a certificate of deposit and mortgage for a new home is the type of the saving which is for the future use.