Is each of the following situations an example of savings, investment, or neither? In each case explain your choice
(a) A savings and loan association lends money for the purchase of "junk" (not backed) bonds.
(b) John's income is $25,000 per year; $22,000 is spent on consumer goods and the remaining money is used purchase stock in the local electric company.
(c) Just before retirement a couple sells their shares of Pacific Bell stock and puts the proceeds in a bank savings account.
(d) The city of Los Angeles rebuilds highways after an earthquake.
(e) In order to improve the income earning potential of current welfare recipients, the federal government increases the size of income transfers.
(a) This example is neither savings nor investment because it is a financial transaction.
(b) This is an example of savings to John because it is foregone consumption.
(c) This example is neither savings nor investment because it is a financial transaction.
(d) This is an example of social investment because the city is building a product that is useful for future and current residents.
(e) This example is neither savings nor investment because it is a transfer from taxpayers to welfare recipients.
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Answer the following statement true (T) or false (F)
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a. True b. False