Consumption Flashcards

1
Q

What are the levels of consumer spending affected by?

A
  • MPC
  • MPS
  • APC
  • APS
  • Consumer confidence - influenced by employment security, real disposable income (and therefore inflation), household wealth.
  • Interest Rates and the supply of credit.
  • Distribution of Income.
  • Actual changed in the economy, e.g: changes in house prices.
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2
Q

What is the MPC?

A
  • Marginal Propensity to Consume.
  • The amount of an increase in earnings that is spent (change in consumption divided by change in income).
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3
Q

What is the MPS?

A
  • Marginal Propensity to Save
  • The amount of an increase in earnings that is saved.
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4
Q

What is the APC?

A
  • Average Propensity to Consume.
  • The total proportion of income spent (consumption divided by income).
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5
Q

What is the APS?

A
  • Average Propensity to save.
  • The total proportion of income saved.
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6
Q

KPMG UK’s Consumer Pulse Survey for the first quarter of 2024:

A
  • 52 percent of consumers say they have had to cut their non-essential spending.
  • Only 3 percent say they’ve been able to spend more on essentials.
  • 4 in 10 shoppers say they are buying more own brand/value produce.
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