Thinking like an economist: The basic vocabulary of the field - Essay Example

This paper will seek to provide ways in which a college education increases one’s human capital. Apart from that, the paper will explain the issues a nation will undergo when its production possibilities curve shifts inward. Additionally, the paper will attempt to show some ways in which the technological changes “Cut Costs”, increase in “Profits”, and “Boost Productivity” of a nation affects the curve of production possibilities. Human capital Most econometrics tend to avoid the aspect of human capital in their discussions since it does not make that much impact to most investors especially those who do not understand the interior wordings of economy and investment.

The most clear and precise provided in many articles defines human capital as the present or current value of the entire future wages. In order to understand how a college education increases one’s human capital, it is important to look at some relevant examples. Young age is always the predominant valuable asset that an individual can own (Rittenberg & Tregarthen, 2009). Financial analysts maintain that human capital is the best conquerable weapon against inflation. People with a strong and considerable professional achievement always command their wages despite how their local currency inflates.

With that in mind, it is conclusive that a college education is an additional effort, skill, and/or ability towards increasing an individual’s capability to earn higher wages in the future. Therefore, undertaking a college education is similar to investing in one’s human capital. The time-consuming and monetary investments that individual resolves to undertake in early life such as obtaining a college degree, learning proficient social skills, and on-the-job training can increase a person’s human capital.

Substantially, a college education enables one to be in a position to determine the amount of money any company in need of his skills will have to pay in exchange of his skills (Rittenberg & Tregarthen, 2009). This shows that wage determination is one way that a college education increases an individual’s human capital. Human capital intertwines with financial capital in terms of allocation. This means that, in an individual’s life, financial and human capital should never go in a similar direction.

The movement of financial and human capital in the opposite direction gives the individual a chance or rather an opportunity to emply his or her human capital in increasing their financial capital (Rittenberg & Tregarthen, 2009). Economists refer to this as an “opportunity” since financial capital does not come as a gift. Financial capital is an earned item and comes through wages, smart investment decisions, and savings among others. For a person with a college education, it is possible and easy to maintain an opposite directional movement of the financial and human capital at all times.

Further, such people manage to make smart investment decisions, which increases their monthly wages and makes them realize immense savings. A nation’s production possibilities curve shift inward A country’s production possibilities curve can shift in two different ways, which may be either inward or outward. In one way, a nation’s production possibilities curve can shift outwards due to improvement in technology that is beneficial to both types of goods. Moreover, increased workforce that might result to increased