Question

Classify each of the following based on the macroeconomic definitions of saving and investment:1. Saving Investment Kyoko borrows money to build a new lab for her engineering firm. 2. Rina purchases stock in NanoSpeck, a biotech firm. 3. Musashi takes out a mortgage for a new home in Detroit. 4. Jacques purchases a corporate bond issued by a car company.

Answer 1

Answer

The classification is shown below:

Explanation:

The saving refers to the amount i.e above its consumption expenditure let us take an example if an individual salary is $100,000 and its expenditure assumes $50,000 then it saves $50,000 so the $50,000 is the savings.  While the investment is the amount that is spent to buy some assets in terms of building, machinery, home, etc.

So the classification is presented below:

a. Kyoko borrows money to build a new lab for her engineering firm.  = Investment

b. Rina purchases stock in Nano Speck, a biotech firm.  = saving

c. Musashi takes out a mortgage for a new home in Detroit. = investment

d.Jacques purchases a corporate bond issued by a car company. = saving