Question

Indicate whether each of the following situations represents saving or investment. Situation Saving Investment Your family takes out a mortgage and buys a new house. You use your $200 paycheck to buy stock in AT&T. Your roommate earns $100 and deposits it in his account at a bank. You borrow $1,000 from a bank to buy a car to use in your pizza delivery business.

Answer 1

Investment

Investment

Savings

Investment

Step-by-step explanation:

Savings are the part of income that isn't spent on expenditure. Investment is the buying of goods not for it's immediate consumption but to generate further wealth.

Buying a new house is an investment. This is because the house can be sold in the future which will generate income to the owner. Buying a stock in AT&T is an investment. This is because the stock bought will generate interest and bring income.

Depositing an amount of money in a bank account is a saving. The money is kept until when needed and it isn't expected to bring further wealth while at the bank for the saver.

Borrowing money from a bank in order to buy a car for pizza delivery is an investment as it will generate further income for the business.