Investment Savings - banks and other financial agencies...

Info icon This preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
Investment Savings: Capital formation begins with the act of saving . Right from the days of Adam Smith (1776) economists have recognized the importance of savings. They have often called it thrift . In order to make capital goods available, society must protect or set aside part of the wealth from being presently consumed . Since in modern times economic activities are carried out in money or currency units part of the income is to be saved. Such individual savings are collected by
Image of page 1
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: banks and other financial agencies. These collective savings are passed on to businessmen for the purpose of investment. The investors make use of borrowed savings either to purchase or construct new capital goods. Finally, such goods are used in productive activity. T he entire process makes up for capital formation activity. Any flaw or delay in the process reduces final outcome of capital goods....
View Full Document

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern