Question

Why is it necessary to maintain the equilibrium between savings and investment in a country

Answer 1

To understand that, you have also to understand the relationship of these concepts with consumption.

So consumption represents the final use of a good or service, in other words, consumption means that the resources allocated for that purpose are not allocated anywhere else (“Consumption is destruction” Karl Marx).

Saving is a process by which you are not using all the resources to which you have a claim to, meaning that they can now be used to other purposes like investments.