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Explain the difference between saving and investment as defined by a macroeconomist. Which of the following situations represent investment and which represent saving? Explain. a. Your family takes out a mortgage and buys a new house. b. You use your $200 paycheck to buy stock in AT&T. c. Your roommate earns $100 and deposits it in his account at a bank. d. You borrow $1,000 from a bank to buy a car to use in your pizza delivery business.

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Principles of Macroeconomics (Mind...

8th Edition
N. Gregory Mankiw
Publisher: Cengage Learning
ISBN: 9781305971509

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Chapter
Section
BuyFindarrow_forward

Principles of Macroeconomics (Mind...

8th Edition
N. Gregory Mankiw
Publisher: Cengage Learning
ISBN: 9781305971509
Chapter 13, Problem 3PA
Textbook Problem
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Explain the difference between saving and investment as defined by a macroeconomist. Which of the following situations represent investment and which represent saving? Explain.

a. Your family takes out a mortgage and buys a new house.

b. You use your $200 paycheck to buy stock in AT&T.

c.    Your roommate earns $100 and deposits it in his account at a bank.

d. You borrow $1,000 from a bank to buy a car to use in your pizza delivery business.

Subpart (a):

To determine
The difference between the savings and investment.

Explanation of Solution

The macroeconomists defines the savings of the individual as the excess income of the individual over the consumption of the individual. When there is excess income to the consumer than his consumption expenditure, this part of the income turns out to be the savings...

Subpart (b):

To determine
The difference between the savings and investment.

Subpart (c):

To determine
The difference between the savings and investment.

Subpart (d):

To determine
The difference between the savings and investment.

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