week 5 Economics Discussion

Yanjun Chen 

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2. In what way is a college degree a form of capital?

A college degree is a form of capital in the form of human capital.The improvement of productivity by university education: the quality of talents Q is mainly determined by the education level S and ability Q. The education level of a person who can get the best income is not the higher the better, but related to his ability certificate.The college stage is the transition period from the juvenile life to the recognition life and into the society. College students learn professional knowledge on the one hand and cultivate the ability to adapt to the society on the other hand.The essence of capital is value increment. As a kind of capital, the human capital of college students also has the function of value increment.By investing in education and health of college students, the quality and quantity of human resources can be improved, which can greatly enhance the income expectation of college students' human capital investment. College degree is the proof of talent's ability to receive education for a certain period of time. It is a manifestation of talent's value.In the labor market, talents earn higher wages than the average labor force and are generally considered to have higher labor productivity than the average labor force, so a college degree is called human capital.

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Jie Lin 

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3. Explain how higher saving leads to a higher standard of living. What might deter a policymaker from trying to raise the rate of saving?

Higher saving means that there is higher loanable funds with lower interest rate available for the funds to borrow and invest. This will lead to investment in the capital for the future. This will help to boost the future productivity through investing the resources we have today for the sake of future growth. This will help to increase the standard of living.

However, the policy makers have to consider the reduction in the current consumption due to the investment in the capital for future growth. If more resources are dedicated to produce more of the capital goods into the future, the current consumption of goods and services will decline.