Savings

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  • #18088
    Jthomp76
    Member

    Why do more savings necessarily lead to more capital investment? With the low interest rates, why isn’t it just as easy for firms to borrow money to build this equipment?

    #18089
    jmherbener
    Participant

    Other people must save in order to have funds to lend to entrepreneurs. Entrepreneurs can be either self-financing, in which case they use their own savings, or obtain funds from financial markets, in which case they use other people’s savings.

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