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Brief Principles of Macroeconomics...

8th Edition
N. Gregory Mankiw
ISBN: 9781337091985

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BuyFindarrow_forward

Brief Principles of Macroeconomics...

8th Edition
N. Gregory Mankiw
ISBN: 9781337091985
Textbook Problem

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

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. On the other hand, the investment is the expenditure on the income generating assets, ...

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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