Actually I just read the paper for assignment before the class, while Dr Johnson introduced a lot of knowledge in the pre-reading. But I caught the word discount which is included in the assignment question that I could not figure out, then I listened carefully and totally confused at last. I discussed with Jing and she gave me an example: when she was born, her mother bought her a kind of marriage insurance for 2,000 which promise that she will get 10,000 when she get married. But the 10,000 is much less worthwhile than that in 20 years ago. I got the difference of value at that time. My father is a Ph.D in economy (I am a little down that I do not inherit his talent in economy), I asked him for the discount and he gave me a number line.
In a way, we can consider that the value of 2,000 and 10,000 are equal, but the amount is different. As the time goes, the amount will become bigger as a result of inflation. When you look from the view of 2,000, the difference is discounting; when you look from view of 10,000, the difference is interest.
And I read the materials carefully after class, it is really helpful. The concept, measurement and evaluation will help to give a comprehensive thinking. I quite agree with Dr. Johnson that economy will not tell you how to use money. It is an evaluation of distribution.
I also like the way that a professor provide two classes in a week for us to understand a topic more. I like the pre-readings and the reviewing in the class.
Maybe I can take a course of economy next semester.
Posted by Xiaoxiao
I think your example is excellent, in its simplicity!It seems that the value of the policy, adjusted for current times, nets the same as the original investment!
ReplyDeleteLee