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Classify each of the following based on the macroeconomic definitions of saving and investment.
- 1. Madeline buys new bulldozers for her construction firm.
- 2. Kevin purchases stock in Goohoo , an information technology company.
- 3. Xavier takes out a loan and uses it to build a new cabin in Montana.
Business investment refers to the fact that the investor puts money into in order to perform business-related activities, like the creation of an organization for economic growth Buy shares, participate on capital investment, contribute capital of economic entities and investment in the form of a contract, or in the execution of an investment plan.♦ Relevant knowledgeSavings is the amount of money which has been set aside which is guaranteed to more value. Investments are a risk or depreciated investment which isn’t certain to generate income, however it could still provide benefits for society.
1. Purchase of bulldozers to the construction company could be an instance of an investment. It’s a loss in financial terms but it can be profitable for the company, and it can still be an investment worth considering.
2. Save because he will receive dividends from the stock.
3. The construction of a brand modern cabin can be an illustration of an investment. Constructions are depreciated and don’t guarantee to earn a profit.
1) Investment because new capital stock will be added.
2) Save because he will receive dividends from the stock.
3)Investment, additional capital is added.