Answer to Question #21557 in Macroeconomics for Kanapati

Question

what is investment?
how its related to national savings and national income?

Answer 1

Investment is nothing more than savings that earns a return. This usually happens when the saver takes his
savings out from under the mattress and lends it to someone else to use in
return for giving you back more money than you started with.

Governments define "savings" and "national savings" in different ways.
It is perfectly logical to get confused easily. The US government defines
"savings" quite differently than "wealth" and as a result
the US savings rate is a somewhat odd thing. It does not included non-cash savings that are invested
outside the working definition of disposable income.