2006-07-27 03:10:05 · 3 answers · asked by jodihemp@sbcglobal.net 1 in Social Science ➔ Economics
In classical theory it is assumed that savings comprises the bolstering flow to the stock of capital (the antithesis being depreciation).
Savings and consumption are opposites in terms of use of income. Therefore there is a trade-off between capital formation and consumption.
2006-07-28 02:19:12 · answer #1 · answered by Veritatum17 6 · 0⤊ 0⤋
Disposable income = Consumption + Saving
Saving = Investment + Hoarding
Investment - Capital consumption allowance = Net investment
Capital formation is the total net investment over many years.
2006-07-27 13:06:47 · answer #2 · answered by NC 7 · 0⤊ 0⤋
they are interrelated with each other. savings help in investment investment forms capital, capital increases wealth & more wealth increases the rate of consumption.
2006-07-28 01:20:20 · answer #3 · answered by kuki 2 · 0⤊ 0⤋