When will saving equal the surplus funds a spending unit has available to lend?
A)When the spending unit purchases primary financial assets
B)When the spending unit purchases either direct or indirect financial assets
C)When the spending unit does not make any investment in capital, inventories, or newly-constructed houses
D)When the spending unit purchases primary or secondary assets

Question

Quizplus · Accepted Answer

The question is asking when saving equals surplus funds available to lend. Saving is the amount of money a spending unit has left after consumption and investment. Surplus funds available to lend are the funds that are available to lend after subtracting consumption and investment from income. Therefore, when the spending unit does not make any investment in capital, inventories, or newly-constructed houses, saving will equal surplus funds available to lend. Option C is the only choice that satisfies this condition.

When Will Saving Equal the Surplus Funds a Spending Unit