In macroeconomics, the difference between saving and investment is that:
A)saving is the money left over after paying for spending, and investment is the purchase of new capital.
B)saving is the money left over after paying for spending, and investment is the purchase of stocks and bonds.
C)saving is created by the government, and investment is specific to firms.
D)saving does not depend on income, but investment depends on profitability.

Question

Quizplus · Accepted Answer

Saving refers to the amount of money left over after an individual or a household pays for consumption expenditures, while investment refers to a purchase of new capital goods. In other words, saving represents the portion of income that is not spent on consumption, while investment represents the creation of new physical capital assets that can be used to produce goods and services in the future. Thus, choice A correctly defines the difference between saving and investment. Choices B, C, and D are incorrect because they either define investment in terms of financial assets rather than physical capital, or make false statements about the sources or determinants of saving and investment.

In Macroeconomics, the Difference Between Saving and Investment Is That