2.2.2 - Consumption Flashcards
1
Q
What is consumption?
A
Spending on consumer goods and services over a period of time.
2
Q
What are some factors affecting consumption?
A
- interest rates
- income
- inflation
- consumer confidence
- taxes
- how much they want to save
- wealth/savings
- value for money
- availability of credit
3
Q
What is saving?
A
The act of forgoing consumption.
4
Q
What is the savings ratio?
A
Saving / disposable income.
5
Q
What is mps?
A
Marginal propensity to save, the proportion of disposable income which is saved.
6
Q
What are some reasons for saving?
A
- retirement
- precautionary saving
- to acquire wealth
- high interest rate = high reward
- deposit for a house/car
