Households Flashcards

1
Q

Define ‘Disposable Income’.

A

Income after income tax has been deducted and state benefits received.

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2
Q

Define ‘Rate of Interest’.

A

A charge for borrowing money and a payment for lending money.

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3
Q

Define ‘Average Prospensity to Consume’.

A

The proportion of household disposable income which is spent.

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4
Q

Define ‘Savings Ratio’.

A

The proportion of household disposable income that is saved.

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5
Q

What is a loan to help buy a house called?

A

Mortgage

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6
Q

What are the 7 main influences on saving?

A
  • income
  • wealth
  • rates of interest
  • tax treatment of savings
  • range and quality of financial institutions
  • age structure
  • social attitudes
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7
Q

Why do people borrow money?

A

To spend more than their disposable income.

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8
Q

What are the main influences on borrowing?

A
  • the availability of loans
  • rates of interest
  • confidence
  • social attitudes
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