Saving is called a leak because money is not used in the economy in a particular way it is leaked out of the economy.
Explanation:
A planned investment is called an injection because capital investments are moved into the existing economy. This method is used to expand a business.
To avoid savings leakage savings must be equivalent to planned GDP equilibrium investment in the private closed economy. The leakage is the non-consumption use of income, that includes savings,taxes and imports.
At equilibrium GDP there will not be any changes in unplanned inventories because the expenditures will exactly equal the planned output levels that include consumer goods and services and planned investment. Hence, There is no unplanned investment and no unplanned inventory changes.
It was good, I just despise homework
<span>It is very simple. The more often it is compounded the better. So daily is the best, next is weekly, monthly etc. The greater the number of compounding periods, the better it is for your bottom line.
With a savings account you are lending the bank money but with a mortgage they lend you money so conversely, you want as few compounding periods as possible.
It works this way because at each break point to which they compound interest (ie.say monthly) they capitalize (add the interest earned to that point) into the investment and you earn interest on your interest for the next period as well as on the principal you started with (next month in this scenario) So the more often they include the interest earned into the calculation (compound periods) the greater the impact on growth. hope it helps
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