The Different Forms of Savings

University:
Stanford University
Course:
ECON 1 | Principles of Economics
Academic year:

2024
Views:

100

Pages:

2
Author:

larbi43100

The different forms of savings every economic agent is required to make a decision relating to the part of income which will be consumed immediately and that which will be saved. The portion of the saved income is placed in different assets which constitute the saver's assets. These assets are grouped into two categories. Financial assets: this type of assets refers to households such as life insurance, investment securities, savings accounts. The investment is generally linked to the search for a financial return and gives rise to remuneration of which the interest rate is the common form. This form of savings allows you to ultimately have an increase in the sums placed in the bank, in financial products. Financial investments have become more attractive and have increased since the 1990s. Non-financial assets: they include other assets constituting the assets of households. These are monetary assets and real assets. Monetary assets contain monetary liquidity. This form of liquid savings allows the economic agent to have money available. Hoarded currency brings nothing to its holder, it can even lose its value in the event of inflation. Real assets include furniture, machinery, land, buildings, housing. In household wealth, housing represents the main non-financial asset. V-2/ The microeconomic determinants of consumption and savings If the act of consuming means an immediate use of purchasing power, saving consists of postponing the purchasing decision over time. Household arbitrage in consumption and savings decisions is explained by several determinants. / The determinants of consumption:Consumption is both an economic and social act. Which leads us to distinguish between non-economic determinants and economic determinants. / Non-economic determinants:they refer to the sociological factors which intervene in the act of consumption. Indeed, consumption is determined by the socio-cultural environment in which the consumer finds himself. Sociologists consider the following factors: Social class: the reproduction of the lifestyle of the original social class influences consumption.