#cfa-level #economics #microeconomics #reading-13-demand-and-supply-analysis-introduction #study-session-4
Households may choose to lend their accumulated savings (in exchange for interest) or invest it in ownership claims in firms (in hopes of receiving dividends and capital gains).
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Open itThrough, saving households can accumulate financial capital, the returns on which can produce other sources of household income, such as interest, dividends, and capital gains.
Households may choose to lend their accumulated savings (in exchange for interest) or invest it in ownership claims in firms (in hopes of receiving dividends and capital gains). Original toplevel document
2. TYPES OF MARKETS they judge that the value of the productivity of workers is greater than the cost of employing them. A major source of household income and a major cost to firms is compensation paid in exchange for labor services.
Additionally, <span>households typically choose to spend less on consumption than they earn from their labor. This behavior is called saving , through which households can accumulate financial capital, the returns on which can produce other sources of household income, such as interest, dividends, and capital gains. Households may choose to lend their accumulated savings (in exchange for interest) or invest it in ownership claims in firms (in hopes of receiving dividends and capital gains). Households make these savings choices when their anticipated future returns are judged to be more valuable today than the present consumption that households must sacrifice when they save.
Indeed, a major purpose of financial institutions and markets is to enable the transfer of these savings into capital investments. Firms use capital markets (markets for Summary
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