Economics

One of the many reasons that people save is to send their children to college. Another is to make a down payment on a home. Yet another is for those years after people stop working. There are different methods of saving for retirement, each having different risks. As you read this section, you’ll learn about special savings plans and the amount of risk involved in these investments.

Unemployment is a challenging and distressing experience, often compared to a major life upheaval like a severe accident or a difficult divorce. Those affected face financial uncertainty, stress, and lifestyle adjustments, such as depleting savings, downsizing, or relocating to a more affordable home. Even after finding new employment, the job may pay less than the previous one, impacting an individual’s self-worth, family relationships, and overall well-being.

The vast studies of business cycles are invaluable to the possibilities of understanding the state of the macro economy and to be able to predict the future movements of the economy. Many of the most famous economists in history, such as Keynes and Schumpeter have been researching this subject, but in this section I will mainly use the research by The National Bureau of Economic Research (NBER) as their research is widely accepted among economists in the U.S. today.

The Law of Supply is a fundamental principle in economics that states:

• As the price of a good or service increases, the quantity supplied also increases.
• As the price decreases, the quantity supplied decreases.

This happens because higher prices make production more profitable, encouraging businesses to produce and sell more. Conversely, when prices drop, suppliers may reduce production because it becomes less profitable.

People often save their money in banks and savings institutions to earn a stable interest rate. However, for those seeking higher returns, investing in stocks and bonds can be a lucrative alternative—though it comes with varying levels of risk.