AD- Consumer Expenditure Flashcards
What is Consumer Expenditure
Spending by households on home produced goods and services
What are the factors that effect Consumer Expenditure
-Real Disposable Income
-Wealth
-Consumer Confidence and expectations
-Interest Rates
The age structure of the population
-The distribution of Income
-Savings
-Govt Policies
What is Real Disposable income and how does it affect Consumer Expenditure
It’s the available money consumers have after tax. The higher it is the higher the consumption will be.
What is Consumer Confidence and Expectations and how does it affect Consumer Expenditure
It’s the It’s how positive people are about the economic future. When people are optimistic about the future they spend more
What is Age Stucture and how does it affect Consumer Expenditure
How old the populations is as an average. Young people tend to spend more of their disposable income.
What is The Distribution of Income and how does it affect Consumer Expenditure
The Distribution of Income is how the wealth is distributed among the rich and the poor. The poor spend a much higher percentage of their income than the rich.
What is Savings and how does it affect Consumer Expenditure
Saving is when people put a proportion of their real disposable income into a bank. The more they save the less they have to spend on consumer expenditure.