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.

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)