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15 December, 03:05

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

A. Ginny buys new bulldozers for her construction firm.

B. Eric purchases a certificate of deposit at his bank.

C. Kenji takes out a mortgage for a new home in Detroit.

D. Lucia purchases stock in Pherk, a pharmaceutical company.

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Answers (1)
  1. 15 December, 06:18
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    Answer and explanation:

    Saving implies setting an amount of money of your income aside and put it into a bank account or store it somewhere considered safe. If deposited in a bank the money gains interest, thus, there will be a relative increase in the initial sum deposited.

    Investing implies providing money to a third party or using that money personally to start up a venture. In such cases, there is a risk that the investment could be lost.

    Thus:

    A) Ginny buys new bulldozers for her construction firm. (Investment)

    B) Eric purchases a certificate of deposit at his bank. (Saving)

    C) Kenji takes out a mortgage for a new home in Detroit. (Investment)

    D) Lucia purchases stock in Pherk, a pharmaceutical company. (Saving)
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