The difference between saving and investment
Saving means households set aside income instead of spending it. Investment means firms spend money on new capital goods, like machinery or buildings, to increase productive capacity.
Real World
During the 2008 financial crisis, UK household saving rates surged as people became cautious, while business investment collapsed — GDP fell sharply because the injection (investment) dried up while the withdrawal (saving) increased simultaneously.
Exam Focus
Always define both terms precisely in 'distinguish between' questions; examiners award marks for explicitly labelling saving as a withdrawal and investment as an injection.
Price Elasticity of Demand
PED = % change in quantity demanded ÷ % change in price
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