Case Study 2

Chapter 5 Business Analysis (5 pts. Due at the end of Module 4) Harry, a friend of yours, is taking a course in economics, and has become confused by some of the terminology because of the way people commonly use the same words. The economics professor says investment occurs when companies buy equipment and build factories. Yet Harry has always heard people talk about investing as a method of saving when they put money in the bank or purchase securities. He's confused by these dissimilar uses of the word, and has asked you to explain. After asking for your help, Harry happily states that there's one thing he does understand perfectly about what the econ prof says, and that is "savings equals investment." Since investing in stocks and bonds is also saving money, it's obvious that savings equals investment!
QUESTIONS NOTE: TYPE YOUR RESPONSES IN THIS DOCUMENT. THE DOCUMENT WILL EXPAND AS YOU ENTER YOUR RESPONSES SUBMIT THE COMPLETED DOCUMENT TO THE DROPBOX BY THE END OF MODULE #2.
How do the nationwide savings (of individuals) equals investment (of businesses)?