b) Influences on consumption
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Last updated 8:15 PM on 2/3/26
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4 Terms
1
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state the three factors that influence consumption
the interest rate
consumer confidence
the wealth effect
2
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state the effect of a low interest rate on consumption
more borrowing
more spending + less saving
+
lower value of monthly loan payments
more spending + less saving
3
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describe how strong consumer confidence increases the incentive to consume
higher job security + security in receiving regular salary payments
less saving + more spending
4
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describe how the wealth effect increases the incentive to consume
rise in → house prices + value of assets
increased feelings of wealth
less saving + more spending
Flashcards (393)