What is the relationship between savings, capital formation, and consumption? (macroeconomics Qs)?

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Please don't ask us to do your econ hw.

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In macroeconomics we need to consider the aggregate or generalized quantities of all these three subjects in the question.

Generalized SAVINGS allow the banks to have, control of and to lend money, and this will then partly be used for the production of durable capital goods (which are sometimes called capital). (There is a present-day claim that the banks can also make their own money, but this does not explain why they need to use savings, nor why they needed bailing out in 2008.) These goods are also used in the production process to make more durable capital goods and consumables and to supply services.

CAPITAL FORMATION is the process by which the accumulation of money is deliberately caused by the selling shares for investment in public companies on the stock-market. Money within the company is then mostly spent during the process of production.

When money is earned by a worker, little or none of it is used for investment and most or all of it is used for purchasing goods. Some of these goods are for CONSUMPTION by the worker and his dependent family as a household.

There is an inverse relationship between consumption and savings because for a fixed amount of incoming earnings, the more a householder consumes the less it saves.

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