Two of the most vital functions performed in any economy are _________________6

Two of the most key functions performed by individuals and institutions in any economy are saving and investment. Without these, economies would not grow and flourish. The concept of saving is at least as old as Aesop’s fable "The Ant and the Grasshopper." The ant worked hard all summer to put away enough food for the winter, while the frivolous grasshopper chirped and played. When winter arrived the grasshopper had no food to eat, but the ant had plenty.
    In any economy, individuals have two ways to use income — they can spend it or save it. Much of what is spent is used to buy goods, much of what is saved is used to invest in the companies that produce the goods. If too much is spent and too little saved, the economy’s capacity to produce will be diminished. If, on the other hand, too much is saved and too little spent, there will be more money available for investment than can possibly be used, and not enough people will buy what is produced. Under such circumstances, only when people begin to spend more will there be any reason for companies to invest in new buildings, machinery, or employees.