Examples of investment and savings in national income

Here are examples of investment and savings in the context of national income:

Investment refers to spending on capital goods (like machinery, buildings, and equipment) that will be used to produce goods and services in the future. It also includes changes in inventories.

• A company buying new machinery for its factory.
• A construction firm building new houses.
• An increase in the amount of unsold goods a business has in its warehouse (inventory investment).

Savings represent the portion of income that is not spent on consumption. In national income accounting, savings are typically considered to be what is left after consumption and taxes are paid.

• An individual depositing money into a savings account.
• A company retaining its profits instead of distributing them as dividends.
• Households buying bonds or stocks.