Investment Savings - banks and other financial agencies....

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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
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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....
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This note was uploaded on 11/26/2011 for the course ECONOMIC ec 201 taught by Professor - during the Fall '10 term at Montgomery.

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