Session Overview
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Now that we understand what the cost and benefits are of different consumption and investment decisions over time, we can understand how both firms and individual consumers make decisions about how much to invest in different types of opportunities. In this lecture, we will discuss how individuals make major decisions, such as whether to attend college and how much to save for retirement. The savings of individuals drive the growth of our economy. Image courtesy of B3OK on Flickr. |
Keywords: Investment decisions; net present value; discount rate; subsidized retirement savings programs.
Session Activities
Readings
Before watching the lecture video, read the course textbook for an introduction to the material covered in this session:
- [R&T] Chapter 13, "Interest Rates and the Markets for Capital and Natural Resources."
- [Perloff] Chapter 16, "Interest Rates, Investments, and Capital Markets." (optional)
Lecture Videos
View Full Video
View by Chapter
- Determining Savings Decisions Over Time (00:06:56)
- Investment Decisions and Net Present Value (00:12:21)
- Application of Investment Decisions: Human Capital (00:06:34)
- The Importance of Savings (00:03:43)
- Policy Efforts to Increase Long Term Savings (00:17:53)
Resources
Check Yourself
Concept Quiz
This concept quiz covers key vocabulary terms and also tests your intuitive understanding of the material covered in this session. Complete this quiz before moving on to the next session to make sure you understand the concepts required to solve the mathematical and graphical problems that are the basis of this course.