Access for free at openstax.org
4.2 • Demand and Supply in Financial Markets 99

Economists call this intertemporal decision making because it involves decisions across time. Unlike a

decision about what to buy from the grocery store, people make investment or savings decisions across a

period of time, sometimes a long period.

Most workers save for retirement because their income in the present is greater than their needs, while the

opposite will be true once they retire. Thus, they save today and supply financial markets. If their income

increases, they save more. If their perceived situation in the future changes, they change the amount of their

saving. For example, there is some evidence that Social Security, the program that workers pay into in order to

qualify for government checks after retirement, has tended to reduce the quantity of financial capital that
{"source": "downloads\\business\\economics\\Microeconomics3e.pdf", "upload_timestamp": "2026-02-07T15:37:44.339247", "source_file": "downloads\\business\\economics\\Microeconomics3e.pdf", "creationdate": "2022-12-07T14:15:44-06:00", "file_name": "Microeconomics3e.pdf", "moddate": "2022-12-07T14:23:05-06:00", "batch_upload": true, "title": "Principles of Microeconomics 3e", "file_size_mb": 26.99, "producer": "Prince 14.2 (www.princexml.com)", "total_pages": 597, "file_hash": "830b81f41611ac67a490444dbb5d6aed292224606965b06965b914443c93331a", "creator": "PDFMiner", "uploaded_via": "batch_uploader", "file_type": ".pdf"}