3.4 – Spending, Saving and Borrowing Flashcards
What is Disposable Income?
The income of a person after all income-related taxes and charges have been deducted.
What is Consumption?
The buying of goods and services
What is Consumer Expenditure?
The money they spend through consumption
Why do people consume?
To satisfy their needs and wants and give them satisfaction.
What are the factors affecting consumption in an economy?
Disposable income
Wealth
Consumer confidence
Interest rates
What is Saving?
Income not spent or delaying consumption until some later date.
Why do people save?/ Factors affecting saving
Saving for consumption
Interest rates
Consumer confidence
Availability of saving schemes
What is Borrowing?
The borrowing of money from one person to another. The lender gives the borrower money. The lender is usually the bank which gives out loans to customers.
What are the factors affecting borrowing?
Interest rates
Wealth
Consumer confidence
Ways of borrowing
What are the expenditure patterns between income groups?
The richer people spend, save and borrow more amounts than the poor.
The poor spend more proportion of their disposable income, especially on necessities, than the rich.
The poor save less proportion of their disposable income in comparison with the rich.
