Describe the relationship between savings, investment, and economic growth.

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Economic growth is fueled by savings and investment. People save money in order to have some sort of financial safety net for hard times. They may also save for larger purchases, such as cars and homes. Cars and homes help to drive the economy because these two sectors employ many people. Banks take money they have on hand and use it to loan to others. Interest on money in savings also allows money to grow in a safe manner.

Investment also fuels economic growth, because it gives businesses more capital to expand their operations or to become more efficient. Investment usually yields a higher rate of return for investors, but there is always a chance that the market or a particular business will experience a downturn and one will lose one's working capital. People invest money in order to build wealth faster than through only savings alone. Many people have their money in both savings and investment accounts in order to both build wealth and to provide a sense of security for the future....

(The entire section contains 5 answers and 702 words.)

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