Consumer Spending Flashcards
How much GDP does consumption represent?
2/3
What macroeconomic goal is affected by consumer spending ?
Stable balance of payments on a current accounts
What are the 3 main areas of consumer spending ?
Consumer durable
Consumer non-durable
Services
What influences consumer spending ?
(Real) incomes
Unemployment
Consumer confidence
Wealth
Taxation
Population
Intrest rates
Availability of credit
What does capacity utilisation tell us ?
What percentage of a machines potential output is currently being produced
What does it mean if we are not at capacity ?
We can increase output without spending on capital
What does an increase exports do to aggregate demand ?
Increase it
What are the positives of Government spending ?
Increase in aggregate demand
Reduction in poverty (jobs seekers allowance)
What are the negatives of Government spending ?
Debt
Inflationary
Short run economic growth
Increase in real expenditure (increase in AD)
C.o.p
Shifts ppf
Long run economic growth
Increase in productive capacity within economy (increase in quality and quantity of F.o.p or technological changes )
Movement within ppf
What does aggregate supply create ?
Aggregate demand
Why is the supply of agricultural goods likely to be prone to unexpected changes ?
External factors such as diseases or decrease in rainfall
To increase quantity of labour Movement tried to drive down wages why did it make things worse ?
Lower wages
Decrease in disposable income
Decrease in consumption
Households buy few goods
Reducing derived demand for labour
What are the 4 Intrest payments affecting consumers ?
Savings
Mortgages- variable
Loans- goods on credit
Credit cards
