...variable. The dependent variable is saving behavior. The independent variables are financial literacy, spending behavior and self-control. 2.1 Saving Behavior (Dependent Variable) Chandra and Long (2013) examined the determinants of saving in the process of economic development, in the...
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... | |Economists long have shown that when it comes to consuming lifetime economic resources, households seek to neither splurge nor hoard, but | |rather to achieve a smooth living standard over time. Consumption smoothing not only underlies the economics approach to spending and | |saving, it is central to the field’s analysis of insurance decisions and portfolio choice. | |Smoothing a household's living standard requires using a sophisticated mathematical technique called dynamic programming to solve a number | |of difficult and interconnected problems. Advances in dynamic programming coupled with today's computers are permitting economists to move | |from describing financial problems to prescribing financial solutions. | |Conventional planning’s targeted liability approach has some surface similarities to consumption smoothing. But the method used to find | |retirement- and survivor-spending targets is virtually guaranteed to disrupt, rather than smooth, a household’s living standard as it ages.| |Moreover, even very small targeting mistakes will suffice to produce major consumption disruption for the simple reason that the wrong | |targets are being set for all years of retirement and potential survivorship. ...
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...among individuals. For example, a model that assumes that all individuals are equal will not be able to make predictions about changes in demand from desktop to laptop computers because the simple model will state that one type of computer is preferred by all. 3. a. i. Sticky prices. Grocery store prices often remain fixed for long intervals of time. ii. Market clearing behavior. The stock market is a type of auction market where the price of shares are constantly adjusting to changes in supply and demand. iii. Market clearing behavior. In recent years, computer manufacturers have changed prices more frequently in response to increased competition and the use of Internet sales. iv. Sticky prices. Pizza places change prices infrequently because they do not want to incur the costs associated with reprinting and redistributing their updated menus to customers. b. Slow price adjustments are common in situations where prices have to be printed for display and therefore are costly to reprint. Also, firms may be reluctant to change prices if they believe that individuals will change their demand behavior if they are confronted by frequent changes. These firms prefer to wait longer...
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...intermediaries • What saving is and its uses • How the financial system channels funds from lenders to borrowers • The role of the Federal Reserve and its regulatory and monetary policy responsibilities Lectures Notes I. Economic and financial analysis of an ever-changing system A. Economics is about how society decides what gets produced, how it gets produced and who gets what. B. Microeconomics studies about individual decision making units. Macroeconomics deals with aggregate or total behavior of all households and firms. C. Finance is about how the financial system coordinates the flow of funds from lenders to borrowers and how new funds are created by financial intermediaries in the borrowing process. D. Historically, the financial system has been highly regulated since a smooth functioning, efficient financial system is vital to a healthy economy. C. In recent years, the financial system has been changing due to new ways to raise and use money through financial intermediation, increased globalization, and deregulation. II. Finance in our daily lives A. Money is something generally acceptable and generally used to make payments. Saving is income not spent on consumption. Both households and firms save. Since businesses do not spend on consumption, all of business income except that distributed as dividends is saving. Household saving is income not spent on consumption. Part of saving is used for investment...
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...Page 1 Analysis of the Recent Economic Downturn In 2007, strong growth in the third quarter lead most to believe that a recession had been avoided, however, this proved not to be the case. A decline in GDP growth is the cause of recessions. Typically, there will be a “goldilocks” economy or an irrational exuberance prior to a recession, followed by a market crash. Prior to the 2007 – 2009 recession, the housing market was going up. Everyone “knew” house values could only go up and behaved accordingly; banks lent too much money to consumers bought too much house. Once the market crashed, the stage was set for a recession. Many factors affecting the aggregate demand curve had declines. As mentioned, home equity declined, as well as the stock market. This decrease in wealth decreased consumption and consumer confidence leading to lower spending. As consumers cut back on spending, business confidence also fell with additional decreases in consumption and also investments. Additionally, foreign GDPs were also declining leading to a decrease in exports. The changes in these variables all caused a shift back in the aggregate demand curve, lowering the GDP. Attempting to counteract the recession, the Federal Reserve pumped money into the economy, increasing the nominal money supply. As the value of the dollar decreased, interest rates were kept low, allowing the exchange rate to remain favorable for exports. Additionally the government increased spending by way of stimulus packages...
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...Ludwig 5/9/2014 Consumer-driven care is a type of health care plan that includes the use of health savings accounts, flexible spending plans or some other sort of savings plan for minor health expenses. Larger expenses for more serious care issues are covered through a catastrophic health insurance plan, which has a large deductible and cannot be used for things such as routine doctor visits. (Goodman, December 2006) The use of a health savings account, flexible spending account or another form of personal savings allows individuals to not worry about whether they are receiving care from an in-network doctor or not. They may seek care from whomever they choose. Further, they alone choose how much to put away in savings for medical issues, and will likely get a choice of different catastrophic plans as well. The main job of any health insurance plan is to prevent the patient from having catastrophic financial losses. While most traditional health plans will also cover more routine matters, this often pushes the cost of those plans higher than they would otherwise be. That is why catastrophic plans were created and the thrust of consumer-driven care. The idea behind patient-centered approaches like consumer-driven care is that if individuals use a health savings plan or flexible spending account, then they will take a more careful assessment of their health care spending, according to a policy brief paper written by John Goodman in December 2006. (Goodman, December 2006) Thus...
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...Economic Decision to Purchase a House Our behaviors and decisions in our daily lives are affected by economics. When making decisions, we will use economic theories either consciously or subconscious to decide if we will make or reject that decision. The same can also be used to explain our actions and behaviors when making an economic decision to purchase a house. This paper will evaluate how economics affect one’s decision to purchase a new house. First, the decision to purchase a new house is considered a large and important decision by many. This is because the prices of houses are usually very high, and thus purchasing a new house will greatly deplete the savings of an individual. The demand of houses is highly price elastic. Economic theories state that the larger the proportion of income a certain purchase requires, the more price elastic the demand will be. In the case of the purchase of a new house, it will require the spending of a large proportion of an average person’s income, hence this will greatly lower the purchasing power of the individual when the decision is made to purchase the house. Furthermore, buying a new house will require people to shift from a familiar environment to a less familiar environment and this can be a life-changing experience which may be scary to some. Hence, these are all factors which make the purchase of a new house a very difficult decision to make. There are various principles of economics that can be applied to a decision to purchase...
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...http://prezi.com/yzqi-phg6rlh/thesis-savings/ "Comparative Analysis on the Savings Behavior of Public and Private Tertiary Students in Batangas City" People’s savings decision is rationally based on their economic situation and preferences. Saving money is a hard task to accomplish though it always gives an impression that when things came up, there goes your savings. We cannot deny the fact that saving money is cornerstone of the successful money management plan. Without savings, you cannot expect to survive if something goes wrong. That is why we have to give emphasis on the development of having a good saving habit. If there is always an attitude of savings individuals would not worry about their future expenses even if uncertain things come especially with resource to finance. There are many ways on how people can save and develop a savings habit. . Moreover, due to the culture of the Filipinos, the Batangueños or the residents of Batangas City wanted to make a change for a better future. It is due to the reason that having fun in spending their money for unreasonable reasons or occasions like fiestas, birthdays and the likes would decrease their savings. They need to have the knowledge on how to save money for their own benefits in case of emergencies or immediate needs of funds. People in Batangas City wanted to learn the proper way of saving their money and adopting a savings habit. Thus, the study is conducted to determine the savings behavior of tertiary students in public...
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...is a branch of economics that focuses on the behavior and decision-making of an economy as a whole. We can also understand macroeconomics as the study of the entire economy in terms of the total amount of goods and services produced, total income earned, the level of employment of productive resources, and the general behavior of prices. Macroeconomists also study aggregated indicators such as GDP, unemployment rates, and price indices to understand how the whole economy functions. And finally, macroeconomists develop models that explain the relationship between such factors as national income, output, consumption, unemployment, inflation, savings, investment, government spending and international trade. Definition: 1. Gross domestic product = gross domestic product (GDP) is the monetary value of all the finished goods and services produced within a country's borders in a specific time period. Though GDP is usually calculated on an annual basis, it can be calculated on a quarterly basis as well. GDP includes all private and public consumption, government outlays, investments and exports minus imports that occur within a defined territory. Put simply, GDP is a broad measurement of a nation’s overall economic activity. The formula to calculate the gross domestic product is as follows: GDP = C + G + I + NX where, C is equal to all private consumption, or consumer spending, in a nation's economy, G is the sum of government spending, I is the sum of all the country's investment...
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...Aggregate Demand and Supply Models ECO/372 Aggregate Demand and Supply Models As the group of economic advisors to the U.S. President, the team has goals they need to achieve. As a team we need to analysis and make recommendations on the following areas: unemployment, expectations, consumer income, and interest rates on how it is affecting the aggregate supply and demand. The team also needs to evaluate each area and make recommendations to make improvements to the economy. The following information will be the team efforts to pull together the best evaluation and recommendations to the economic issues. Unemployment Today’s unemployment rate is at an all-time low but for the government to keep the unemployment at the low rate there are some issues that need to be addressed. Part of the issues is to continue training of employments so they can be employable. With working all employees to keep them trained and up-to- date with the new job opportunities will help the economy grow and be stronger. One recommendation would be to keep people fully employed. The following model would explain a good plan and good business cycle to keep people employed. (A Model of the Macro-Economy: Aggregate Demand and Supply, May) This would be one goal of the economic advisor team to reach so that the U.S. government can be strong and prepare for a strong economy. In the case of the unemployment issues the Keynesian perspective would be a good recommendation due to it’s a short-term...
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...Economic Decision to Purchase a House Our behaviors and decisions in our daily lives are affected by economics. When making decisions, we will use economic theories either consciously or subconscious to decide if we will make or reject that decision. The same can also be used to explain our actions and behaviors when making an economic decision to purchase a house. This paper will evaluate how economics affect one’s decision to purchase a new house. First, the decision to purchase a new house is considered a large and important decision by many. This is because the prices of houses are usually very high, and thus purchasing a new house will greatly deplete the savings of an individual. The demand of houses is highly price elastic. Economic theories state that the larger the proportion of income a certain purchase requires, the more price elastic the demand will be. In the case of the purchase of a new house, it will require the spending of a large proportion of an average person’s income, hence this will greatly lower the purchasing power of the individual when the decision is made to purchase the house. Furthermore, buying a new house will require people to shift from a familiar environment to a less familiar environment and this can be a life-changing experience which may be scary to some. Hence, these are all factors which make the purchase of a new house a very difficult decision to make. There are various principles of economics that can be applied to a decision to...
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...Budget Deficits, National Saving, and Interest Rates William G. Gale and Peter R. Orszag September 2004 Brookings Institution and Tax Policy Center. This paper was prepared for the Brookings Panel on Economic Activity, September 9-10, 2004. We thank Emil Apostolov, Matt Hall, Brennan Kelly, and Melody Keung for outstanding research assistance; Alan Auerbach, William Brainard, Robert Cumby, Bill Dickens, Doug Elmendorf, Eric Engen, Laurence Kotlikoff, Thomas Laubach, Maria Perozek, George Perry, Frank Russek, Matthew Shapiro, and David Wilcox for helpful discussions; and Eric Engen, Jane Gravelle, and Thomas Laubach for sharing data. ABSTRACT This paper provides new evidence that sustained budget deficits reduce national saving and raise interest rates by economically and statistically significant quantities. Using a series of econometric specifications that nest Ricardian and non-Ricardian models, we obtain evidence of strong non-Ricardian behavior in aggregate consumption. Consistent with several recent studies, we find that projected future deficits affect longterm interest rates, but current deficits do not. Our estimates suggest that each percent-ofGDP in current deficits reduces national saving by 0.5 to 0.8 percent of GDP. Each percent-of-GDP in projected future unified deficits raises forward long-term interest rates by 25 to 35 basis points, and each percent-of-GDP in projected future primary deficits raises interest rates by 40 to 70 basis points...
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...Expenditure) as well as the impact upon the individual components that make up GDP (i.e. other macroeconomic components and indicators such as bond rates, money supply, etc.) For this analysis, we have created two models of the U.S. economy and will look specifically at the short run case (the first 5 - 8 quarters spanning 2012-2013). First, we created a “baseline” model which assumed that no change in aggregate expenditures occurred. Next, we created a model with a shock to the economy starting in the first quarter of 2012 by reducing state and local government purchases (COS) by $20 billion per quarter. By comparing the resulting data sets for these two scenarios across several variables, we can predict the impact that the “shock” to government spending would have on both the overall economy and the specific components of GDP. The reduction in state and local government spending was spurred by an overall reduction in tax collections. The government decided to reduce spending as a result. What is not initially clear is why there was a reduction in tax revenues, but there are several possibilities. The reduction in tax revenue could be due to fiscal policy changes, where the population was taxed at a lower rate than in previous periods. However, we know that the reduction in government spending was not due to policy changes, but resulted from changes in other economic conditions such as...
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...assess the claim that it is better to enjoy your money when you earn it than saving your money for sometime in the future. It is all about the money. That is what everyone talks about these days to the extent of even having a television network like Bloomberg dedicated to it. Originally, money was created as an instrument of commerce and was universally used to the measure of value (Smith, 1937). Undeniably, money has taken a dominant place to gain access to being our basic necessity to provide a quality and way of life. It plays a special role in both our personal and social lives, exerting more power over human lives than any other single commodity (Furnham, 1998). So, it is not unusual for one to have a wrestle with the decision of whether to enjoy one’s money when one earns it or to save one’s money for sometime in the future. The statement ‘enjoy your money when you earn’ is an opinion of spending today, whereas the statement, ‘saving your money for sometime in the future’ is an opinion of saving for tomorrow. The overall statement only shows two possibilities of managing money, when in reality, there are other outcomes which include ones that lie somewhere between these two extremities. Therefore, the false dichotomy fallacy occurs. Money attitudes differ from one generation to another. For instance, our parents (generation X) were cautious and conservative in both spending and saving for future use and they influenced us to be the same. However, youth today...
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...“A STUDY ON CONSUMER CONFIDENCE INDEX FOR THE RESIDENTS OF CITY LUDHIANA” MAJOR RESEARCH PROJECT Submitted to PUNJAB TECHNICAL UNIVERSITY In partial fulfillment of Requirement for degree of MASTER OF BUSINESS ADMINISTRATION BY SARGAM NAGRATH (University Roll no- 1335890) DEPARTMENT OF MANAGEMENT PUNJAB COLLEGE OF TECHNICAL EDUCATION BADDOWAL, LUDHIANA AFFILIATED TO: Punjab Technical University, Jalandhar 2013-2015 CERTIFICATE This is to certify the thesis/dissertation entitled ‘Consumer Confidence Index For The Residents Of City Ludhiana’ submitted for the degree of M.B.A in the subject of Finance of the Punjab Technical University is a bonafide research work carried out by Sargam Nagrath (MBA HR & Finance), University Roll no( 1335890) and no part of this thesis/dissertation have been submit by any other degree. The assistance and help received during the course of investigation have been fully acknowledged. Major Advisor: Mrs. Pallavi Dawra ...
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