Chapter 17: Households

Question 1

Influences on spending

Answer 1

• Disposable income
• Wealth
• Confidence
• Rate of interest
• Distribution of income
• Advances in technology

Question 2

Reasons for saving

Answer 2

• Target savers
• Retirement, children, precautionary reasons, and to provide and income or capital gain
• FInance their children’s education or leave them with inheritance
• Increase current income

Question 3

Influences on spending

Answer 3

• Income
• Wealth
• Rate of interest
• Tax treatement on savings
• Range and quality of financial institutions
• Age structure
• Social attitudes

Question 4

Borrowing

Answer 4

• ENables peopel to spend more than their current disposable income
• Involves a cost in the form of interest which has to be paid
• Poor islikely to experience greater difficulty inborrowing because they have less security to offer for any loan

Question 5

Influences affecting amount of money people borrow

Answer 5

• Availability of laons and overdrafts
• Rate of interest
• Confidence
• Social attitudes