Consumption in Aggregate Demand

Question 1

Factors Affecting Consumption

Answer 1

1. Disposable Income and Saving:
   - Marginal Propensity to Consume.
   - Marginal Propensity to Save.
   - Average Propensity to Consume.
   - Average Propensity to Save.
2. Consumer Confidence.
3. Interest Rates and the supply of credit.
4. Distribution of Income.
5. Actual changes in the economy.

Question 2

Marginal Propensity to Consume Definition

Answer 2

The amount of an increase in earnings that is spent.

Question 3

Marginal Propensity to Save Definition

Answer 3

The amount of an increase in earnings that is saved.

Question 4

Consumer Confidence Definition

Answer 4

Influenced by employment security, real disposable income, household wealth, the likelihood of the population to inject into the circular flow of income.

Question 5

Supply of Credit Definition

Answer 5

How easy it is to get a loan/credit card.