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question for experts on economics

English translation: the statement is correct

21:29 Mar 5, 2007
English language (monolingual) [PRO]
Social Sciences - International Org/Dev/Coop / macroeconomics/microeconomics
English term or phrase: question for experts on economics
I'm editing a text about education in an Eastern Europe country, which has an introductory economics sections.

"Domestic demand will be a key contributor to GDP growth, with a shift from private consumption to investment."

This sentence doesn't make sense to me. People either spend (consumption) or save (investment), and if they are indicating that domestic demand (i.e. people in teh country spending) is going to contribute to growth, then that implies that there is a shift in the opposite direction than indicated in the sentence. (I have to say also that it confuses the issue by referring to 'private', as often a distinction is made between individuals and enterprises).
Lia Fail (X)
Spain
Local time: 08:58
Selected answer:the statement is correct
Explanation:
Domestic demand may not be a very common term, but to put it simply, it means:
consumption (private people) +
investment (companies) +
government expenditure (for example for new fighter planes)

If we ignore foreigners, the savings of private people in the country are used to finance the investment of companies (because they ask their banks for credits).

So it all makes sense.

May I recomment Paul A. Samuelson & William D. Nordhaus: Economics? The book is good to read, easy to understand and a great help when it comes to understanding economics.


--------------------------------------------------
Note added at 18 mins (2007-03-05 21:48:40 GMT)
--------------------------------------------------

In economics, the term "investment" (in machines, plants, etc.) is used in a different sense than in finance (invsetment in stocks, bonds, etc.).
Selected response from:

BrigitteHilgner
Austria
Local time: 08:58
Grading comment
Thanks, I closed cos I found the answer, and felt I should unclose to thank you both:-)

Nice expalantion, Brigitte:-). I studied economics....but very long ago:-(. And Magda is right, the text is from Ukraine:-)
4 KudoZ points were awarded for this answer



SUMMARY OF ALL EXPLANATIONS PROVIDED
4 +1the statement is correct
BrigitteHilgner
3"investment" -
Magda Dziadosz


  

Answers


17 mins   confidence: Answerer confidence 4/5Answerer confidence 4/5 peer agreement (net): +1
the statement is correct


Explanation:
Domestic demand may not be a very common term, but to put it simply, it means:
consumption (private people) +
investment (companies) +
government expenditure (for example for new fighter planes)

If we ignore foreigners, the savings of private people in the country are used to finance the investment of companies (because they ask their banks for credits).

So it all makes sense.

May I recomment Paul A. Samuelson & William D. Nordhaus: Economics? The book is good to read, easy to understand and a great help when it comes to understanding economics.


--------------------------------------------------
Note added at 18 mins (2007-03-05 21:48:40 GMT)
--------------------------------------------------

In economics, the term "investment" (in machines, plants, etc.) is used in a different sense than in finance (invsetment in stocks, bonds, etc.).

BrigitteHilgner
Austria
Local time: 08:58
Native speaker of: Native in GermanGerman
PRO pts in category: 4
Grading comment
Thanks, I closed cos I found the answer, and felt I should unclose to thank you both:-)

Nice expalantion, Brigitte:-). I studied economics....but very long ago:-(. And Magda is right, the text is from Ukraine:-)

Peer comments on this answer (and responses from the answerer)
agree  Pham Huu Phuoc
15 hrs
  -> Thank you, Pham Huu Phuoc.
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22 mins   confidence: Answerer confidence 3/5Answerer confidence 3/5
"investment" -


Explanation:
in EE countries (or certainy in mine, Poland) the word 'investment' is frequently used (or misused?) to mean spending for capital projects such as building roads, houses, shopping centres, etc.
Your sentence sounds very familiar to me - looks like a literary translation from Polish meaning that there will be less individual consumption and more capital projects.
And yes, 'private' is also often used to mean 'individual'. So frequently "private consumption" is meant as the opposite of "company spending".

HTH,
Magda

Magda Dziadosz
Poland
Local time: 08:58
Specializes in field
Native speaker of: Native in PolishPolish
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