Question

Classify each of the following based on the macroeconomic definitions of saving and investment. Saving Investment Manuel purchases a new condominium in Miami. Poornima purchases stock in Goohoo, an information technology company. Kate purchases new ovens for her cupcake-baking business. Hubert buys a government bond.

Answer 1

Answer:

The correct answers are:

A) Investment

B) Saving

C) Investment

D) Saving

Explanation:

In macroeconomics, investments are acquisitions spent whether on durable goods, services or both. While savings are the assets accrued after a part of it has been spent on primary goods, services o both. In the two cases, future benefits are expected.

In that sense:

A) Manuel purchases a new condominium in Miami.

This is an investment since the property is considered a durable good.

B) Poornima purchases stock in Goohoo, an information technology company.

This is a saving since stocks are intangibles.

C) Kate purchases new ovens for her cupcake-baking business.

This is an investment. The new ovens are durable goods.

D) Hubert buys a government bond.

This is a saving since bonds as well as stocks are intangibles.