Consumption Flashcards
1
Q
How does disposable income affect consumption
A
Individuals can afford more
2
Q
How do interest rates affect consumption (3)
A
Lower interest rate
saving becomes less attractive
loans become more affordable
individuals with variable-rate mortgages see monthly disposable income increase
3
Q
How do levels of personal debt affect consumption (1)
A
Lower personal debt
Less disposable income directed to repayments
4
Q
How does confidence affect consumption
A
If there is job security
Economy not in a recession
5
Q
How does inflation affect savings
A
the real value of savings is eroded
so the incentive to save reduces
