Classify each of the following based on the macroeconomic definitions of saving and investment. Saving Investment

a. Shen purchases a new condominium in Philadelphia.
b. Poornima borrows money to build a new lab for her engineering firm.
c. Valerie purchases stock in Pherk, a pharmaceutical company
d. Manuel purchases a certificate of deposit at his bank.

Answer and explanation:

Savings can be defined as the allocation of money in different financial instruments to earn profits usually by interest rates at a certain time in the future. Investments require the more active involvement of the individual by which that person can directly influence in the profit-making. Investors might benefit from their ventures in the short and long run.

Thus:

A) Shen purchases a new condominium in Philadelphia. (Investment)

B) Poornima borrows money to build a new lab for her engineering firm. (Investment)

C) Valerie purchases stock in Pherk, a pharmaceutical company. (Saving)

D) Manuel purchases a certificate of deposit at his bank. (Saving)

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