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I have the same question, all the answers seem to be at least beat about the bush the question
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edit approved Aug 16, 2021 at 8:58
Tortar
edit approved Aug 16, 2021 at 8:58
Tortar
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Scenario 1: There's an economy of two people (Joe and Amanda). Joe buys a 500$500$ dollar car from Amanda (which she made herself from raw materials in her back yard). Amanda takes the 500$500$ dollars and hides it under her bed. Savings = 500$500$ dollars, Investment = 0$0$ dollars. What am I missing?

Scenario 2: Same Amanda and Joe. Joe gets 500$500$ dollars from the Federal Reserve (they just gave it to him). He puts it in a bank. The bank decides to only lend out 250$250$ dollars of it. Amanda invests in inventory. S = 500$500$, I = 250$250$. Right?

These are two cases where investments do not seem to equal savings. How can these cases be explained?

Scenario 1: There's an economy of two people (Joe and Amanda). Joe buys a 500 dollar car from Amanda (which she made herself from raw materials in her back yard). Amanda takes the 500 dollars and hides it under her bed. Savings = 500 dollars, Investment = 0 dollars. What am I missing?

Scenario 2: Same Amanda and Joe. Joe gets 500 dollars from the Federal Reserve (they just gave it to him). He puts it in a bank. The bank decides to only lend out 250 dollars of it. Amanda invests in inventory. S = 500, I = 250. Right?

These are two cases where investments do not seem to equal savings. How can these cases be explained?

Scenario 1: There's an economy of two people (Joe and Amanda). Joe buys a $500$ dollar car from Amanda (which she made herself from raw materials in her back yard). Amanda takes the $500$ dollars and hides it under her bed. Savings = $500$ dollars, Investment = $0$ dollars. What am I missing?

Scenario 2: Same Amanda and Joe. Joe gets $500$ dollars from the Federal Reserve (they just gave it to him). He puts it in a bank. The bank decides to only lend out $250$ dollars of it. Amanda invests in inventory. S = $500$, I = $250$. Right?

These are two cases where investments do not seem to equal savings. How can these cases be explained?

clarified the question
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edit approved Oct 29, 2015 at 16:21
HRSE
edit approved Oct 29, 2015 at 16:21
HRSE
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Scenario 1: There's an economy of two people (Joe and Amanda). Joe buys a 500 dollar car from Amanda (which she made herself from raw materials in her back yard). Amanda takes the 500 dollars and hides it under her bed. Savings = 500 dollars, Investment = 0 dollars. What am I missing?

Scenario 2: Same Amanda and Joe. Joe gets 500 dollars from the Federal Reserve (they just gave it to him). He puts it in a bank. The bank decides to only lend out 250 dollars of it. Amanda invests in inventory. S = 500, I = 250. Right?

I know it well enough to pass an exam, justThese are two cases where investments do not well enoughseem to feel like I actually understand itequal savings. How can these cases be explained?

Scenario 1: There's an economy of two people (Joe and Amanda). Joe buys a 500 dollar car from Amanda (which she made herself from raw materials in her back yard). Amanda takes the 500 dollars and hides it under her bed. Savings = 500 dollars, Investment = 0 dollars. What am I missing?

Scenario 2: Same Amanda and Joe. Joe gets 500 dollars from the Federal Reserve (they just gave it to him). He puts it in a bank. The bank decides to only lend out 250 dollars of it. Amanda invests in inventory. S = 500, I = 250. Right?

I know it well enough to pass an exam, just not well enough to feel like I actually understand it.

Scenario 1: There's an economy of two people (Joe and Amanda). Joe buys a 500 dollar car from Amanda (which she made herself from raw materials in her back yard). Amanda takes the 500 dollars and hides it under her bed. Savings = 500 dollars, Investment = 0 dollars. What am I missing?

Scenario 2: Same Amanda and Joe. Joe gets 500 dollars from the Federal Reserve (they just gave it to him). He puts it in a bank. The bank decides to only lend out 250 dollars of it. Amanda invests in inventory. S = 500, I = 250. Right?

These are two cases where investments do not seem to equal savings. How can these cases be explained?

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Why does savings equal investment (scenario)?

Scenario 1: There's an economy of two people (Joe and Amanda). Joe buys a 500 dollar car from Amanda (which she made herself from raw materials in her back yard). Amanda takes the 500 dollars and hides it under her bed. Savings = 500 dollars, Investment = 0 dollars. What am I missing?

Scenario 2: Same Amanda and Joe. Joe gets 500 dollars from the Federal Reserve (they just gave it to him). He puts it in a bank. The bank decides to only lend out 250 dollars of it. Amanda invests in inventory. S = 500, I = 250. Right?

I know it well enough to pass an exam, just not well enough to feel like I actually understand it.