Savings & Investments

Savings can be defined as money set aside or

not spent from one’s personal income.Savings
can be done through a number of formal and
informal financial institutions such as:
-Credit Unions
-Sou Sou
-Commercial banks
-Insurance

Benefits of Savings:
1)Helps in emergencies
2)Limit debt
3)Gives financial freedom
4)Helps finance for special events(such as
weddings)
Investment is defined as methods of increasing
wealth;the purchase of capital goods.

Examples of investments investments include:

-Unit trust companies
-Stock Exchange
-Mutual funds

Open & Closed Economies

Open economies allow importing and exporting

of goods;economies that engage in
international trade.Examples of countries with
open economies are:
Trinidad &Tobago,Jamaica,Guyana,etc.

Advantages:
• Consumers can choose from a large variety of
goods.

• An open economy increases the opportunity

of direct foreign investment.

•An open economy is more flexible.

• An open economy has a greater chance of

adjusting itself with the changes taking place in
world economy.

Disadvantages:

•Risk Exposure

•Import Dependence
•Indebtedness

Closed economies prevent importing and

exporting, and, instead, rely solely on goods
and services produced within the country to
satisfy domestic demand;economies that DO
NOT engage in international trade.Examples of
countries involved in closed economies are:
•Morocco,Algeria (excluding oil sales)

•Ukraine and Moldova (Despite late export

sector)

•Most of Africa, Tajikistan, Vietnam (closest to

the closed economy)

•Brazil (if imports are to be neglected)

Advantages:

•A more independent economy.

•Avoid exchange rate risks and global economic

shocks.

•No pressure from imported products.

Disadvantages:

•Limited growth.

•Fewer product variations;Supply only comes

from domestic production.

•Excluded from international relations.

Difference between OPEN AND CLOSED
ECONOMY

Open Economy Closed Economy

It doesn’t have an It has and economic
economic relation relation with other
with the rest of the countries.
world.

Activities taking place Economic activities

outside the territory of such an economy
do not affect the are affected by
economic activities. international
fluctuations.

There is no difference The size of national

between national income may be
income and domestic greater or smaller
income. than domestic income.

It neither exports It buys debentures,

goods and services to shares, bonds, etc.
foreign countries nor from foreign countries
imports goods and and sell debentures,
services from foreign shares, bonds, etc. to
countries. foreign countries

It doesn’t receive It receives remittance

remittance