https://padlet.com/jamesramseycorp/4jsk217fthwl Identify and explain two factors affecting consumption, use an example to support your understanding. Refer to current economic events in Australia in your answer. Use the success criteria to self-assess your work. en-us 2016-06-12 03:51:51 UTC 2016-06-28 13:16:08 UTC hello@padlet.com jamesramseycorp https://padlet.com/jamesramseycorp/4jsk217fthwl/wish/114399104 1.) Use a full sentence response.
2.) Use appropriate paragraph structure.
3.) Explain your understanding of two factors.
4.) Use an example explaining how each factor affects consumption.
5.) Refer to current economic events (i.e. data) for each factor.
6.) Avoid just copying out your notes.
7.) Proof-read your work. 
8.) Include your name.
9.) Introduce consumption - define, explain, examples of different types of consumption.]]> 2016-06-12 03:57:35 UTC https://padlet.com/jamesramseycorp/4jsk217fthwl/wish/114399104 https://padlet.com/jamesramseycorp/4jsk217fthwl/wish/114436278 Consumption consists of spending on non durable goods, durable goods and services spending by households. Non durable goods are those that are consumer quickly after purchase whereas durable goods can last 3 or more years, goods such as a car or a fridge. Consumption is a factor that affects aggregate expenditure as a whole, in 2014 Consumption made up 56% of GDP, meaning consumption is the largest component of GDP.

A factor affecting consumption is Interest Rates. Households borrow money and use this credit to fund the purchase of cars, homes, phones, etc. Interest rates can affect a consumers willingness and ability to save or spend. Low/Falling interest rates encourage increased consumption because repayments on borrowed money falls and the oppurtunity cost of spending on consumer items falls as saving become less attractive. Whereas if interest rates were high/rising then consumer spending should decrease as consumers would want to save and spend less on consumer items. 

Another factor affecting consumption is Disposable Income. This is the income remaining after deduction of taxes, available to be spent or saved as one wishes. The greater level of disposable income in the economy then the greater the capacity of consumption by households. For example someone with a higher levels of income will tend to consume and spend more than someone with a lower level of income. For example in 2006, income levels were at a high meaning that people were spending more. Whereas in 2015 consumers disposable income was low meaning that consumers were spending less.]]> 2016-06-13 01:16:43 UTC https://padlet.com/jamesramseycorp/4jsk217fthwl/wish/114436278 https://padlet.com/jamesramseycorp/4jsk217fthwl/wish/114436281 Consumption is defined as the use of non-durable goods, durable and services by households. Non-durable goods are goods that are consumed quickly after purchase an example is food. Durable goods are goods that last 3 years or more. An example of a durable good would be cars. 

One factor that will influence the consumption of households would be Interest Rates. Many households borrow money use credit to fund the purchase of durable goods therefore interest rates will affect their willingness and ability to spend or save. Lower/Falling interest rates will tend to to encourage increased consumption for two reasons. Firstly the interest repayments on borrowed money falls. And secondly the opportunity cost of spending on consumer items falls as saving becomes less attractive when interest rates are falling as the rate of return on savings falls.

Another factor that is undoubtedly is the most influential determinant of consumption levels is Disposable Income. The greater the aggregate level of disposable income in the economy the greater the capacity for consumption by households.

]]> 2016-06-13 01:16:50 UTC https://padlet.com/jamesramseycorp/4jsk217fthwl/wish/114436281 https://padlet.com/jamesramseycorp/4jsk217fthwl/wish/114436304 Consumption, in economics, the spending of non durable, durable goods and services by households. Non durable goods are those quickly consumed after purchase for example food and clothing. Durable goods however last more than three years, an example being a car or whitegoods. Expenditure on services include things such as education, health and recreational activities. Consumption is The largest factor of aggregate expenditure (total value of spending of households,gov and firms.)

A factor that affects consumption is INTEREST RATES. Many households who borrow money use credit to fund the purchase of durable goods (electronic devices, cars, sports equipment) they want to purchase. Therefore interest rates will affect their willingness and ability to spend or save. Falling interest rates tend to increase consumption for two reasons.
1) households repayments on borrowed money will fall. An example of this can be mortgage repayments will fall, car repayments could fall. Households then will have more disposable income available to spend.
2) low interest rates provide less incentive to save money as there is little to no gain due to the low interest rates. Households are now more likely to spend.
Over the last 5 years interest rates are at an all time low at just over 2%. Saving has decreased in the last 5 years from 10% to 6.5%. Household consumption has not changed noticeably however. There is some suggestion that the lower interest rates are impacting household saving.

Another factor affecting consumption is DISPOSABLE INCOME. This factor is the most influential determant of consumption levels. The greater a persons disposable income in the greater the capacity for consumption by households





]]> 2016-06-13 01:17:16 UTC https://padlet.com/jamesramseycorp/4jsk217fthwl/wish/114436304 https://padlet.com/jamesramseycorp/4jsk217fthwl/wish/114436524 Consumption is spending on non-durable goods, expenditure on services and expenditure on consumer durables. Non-durable goods are those that are consumed quickly such as food and services include education and recreational activities. Consumers spend their income on these items but consumption is dependent on certain factors. These factors are disposable income, interest rates, wealth, expectations and government policies.

A major factor affecting consumption is disposable income. Disposable income is the most influential factor affecting levels of consumption. Disposable income is the amount of income left over after tax and other expenses that consumers have to purchase goods and services. As the levels of disposable income rises, consumption levels also increase because consumers have more money to spend. For example if the level of disposable income rises, the consumption of laptops will increase as consumers have more to spend. The RBA released statistics showing that between 1991 and 2016 whenever disposable income has risen or fallen, levels of consumption have done the same. Therefore, levels of disposable income impact levels of consumption.

]]> 2016-06-13 01:22:07 UTC https://padlet.com/jamesramseycorp/4jsk217fthwl/wish/114436524 https://padlet.com/jamesramseycorp/4jsk217fthwl/wish/114436540  Consumption consists of spending on non durable goods, durable goods and services. Non durable goods are those that are consumed quickly after purchase for example food and Petrol, durable goods usually last for a few years for example cars and services include non-commodity items such as education and health. 

Expectations in one of the major factors affecting consumption.  They are the positive and negative feelings people have about the future state of the economy. This is affected by the level of unemployment, availability of jobs, government decisions, changes 
in interest rates and economic news. For example if people hold positive feelings about the future they are more likely to buy a new tv in the future. Expectations are more likely to affect non essential spending on items such as a new tv and also durable goods such as a car.  

Another factor of consumption is disposable income. Disposable income is how much of an income a person has left after taxes and other expenses.  If disposable income decreased  people are less likely to purchase items. ]]> 2016-06-13 01:22:36 UTC https://padlet.com/jamesramseycorp/4jsk217fthwl/wish/114436540 https://padlet.com/jamesramseycorp/4jsk217fthwl/wish/114436556 Consumption is the use of good and services used by households. It consists of non-durable goods, which are consumed quickly after purchase, expenditure on services such as doctors and plumbers and expenditure on consumer durables such as cars. Consumption is the largest factor influencing of aggregate expenditure.

 A major factor affecting consumption is interest rates. Many households borrow money to purchase durable goods and therefore interest rates will influence their willingness to spend or save. Falling interest rates will encourage consumption. Firstly, interest repayments on borrowed money decreases for example car repayments fall which can lead to more disposable income and therefore there is more money to spend. Secondly, there is a less incentive to save money as interest rates are low which can lead to more spending. 

Another factor affecting consumption is wealth. Households that own shares or property usually feel more wealthy when the value of their assets are rising. As they feel more wealthy they are likely to spend money on items. However, falling property value and falling share value can result in households delaying consumer decisions.

]]> 2016-06-13 01:23:02 UTC https://padlet.com/jamesramseycorp/4jsk217fthwl/wish/114436556 https://padlet.com/jamesramseycorp/4jsk217fthwl/wish/114436569 Consumption consists of households spending on non durable goods, such as food, durable goods such as cars, and services such as going to the movies. Consumption of these items are affected by factors, these include, wealth, which is the sense of being secure, by having assets that have increased in value. And disposal income. This has the most influence on consumption. 

Disposable income is a factor that affects the amount of consumption within an economy.]]> 2016-06-13 01:23:39 UTC https://padlet.com/jamesramseycorp/4jsk217fthwl/wish/114436569 misqj17 https://padlet.com/jamesramseycorp/4jsk217fthwl/wish/114436602 Consumption, in economics, the use of goods and services by households. Consumption is distinct from consumption expenditure, which is the purchase of goods and services for use by households. 

One of the main points affecting consumption levels is the level of disposable income in the community. Other things being equal, households plan to spend more on consumption at higher levels of income.

Government policies also affect aggregate consumption. Fiscal policy affects disposable income through taxation. Monetary policy affects interest rates, and therefore the cost of credit.

]]> 2016-06-13 01:24:59 UTC https://padlet.com/jamesramseycorp/4jsk217fthwl/wish/114436602 https://padlet.com/jamesramseycorp/4jsk217fthwl/wish/114436643 Consumption consists of spending by households on non-durable goods, durable goods and services. It is the largest component of aggregate expenditure. Non durable goods are those that are consumed quickly after a purchase, for example food and clothing. Durable goods usually last for three years or more, like white goods and cars. Services include non-commodity items such as education, health and recreation.

A factor affecting consumption is disposable income. Disposable income is the amount consumers are actually able to spend on goods and services after deductions such as tax. As disposable income rises, consumers have more money to spend on durable goods, therefore consumption levels increase. Real disposable income takes into account inflation. So if disposable income is greater than inflation rate, then consumers are still earning money. An example is if households get a pay rise from firms, consumption will increase as they have more money.

Another factor is interest rates. When households borrow money, they get charged interest. If these rates are high, then it will cause consumption to decrease as they must pay more for the money they are borrowing. However households also lend money to the bank in whih they also get interest from. If interest rates are high, they are less likely to spend, decreasing consumption, as they will save their money so they can make a large amount of interest. The RBA shows that although the cash rate has decreased from 7% to 1% in past 2 years, which now is at the lowest, the rate of consumption has kept steady]]> 2016-06-13 01:25:59 UTC https://padlet.com/jamesramseycorp/4jsk217fthwl/wish/114436643 huntm17 https://padlet.com/jamesramseycorp/4jsk217fthwl/wish/114436646
Consumption consists of households spending on non durable goods, such as food, durable goods such as cars, and services such as going to the movies. Consumption of items are affected by factors, these include, wealth, by having an disposal income. This has the most influence on consumption. 

Disposable income is a factor that affects the amount of consumption within an economy. Disposable income is income after direct taxes and welfare benefits. For example if a households disposable income is quite I they are willing to buy more good then causing consumption to increase.



]]> 2016-06-13 01:26:03 UTC https://padlet.com/jamesramseycorp/4jsk217fthwl/wish/114436646 burtg17 https://padlet.com/jamesramseycorp/4jsk217fthwl/wish/114436938 Consumption consists of spending on non-durable goods, durable goods and services spent by households. Non-durable goods are goods that are consumed quickly whereas durable goods last longer. Consumption is the biggest component . Some factors that affect aggregate expenditure are wealth and government policies 

]]> 2016-06-13 01:32:01 UTC https://padlet.com/jamesramseycorp/4jsk217fthwl/wish/114436938 https://padlet.com/jamesramseycorp/4jsk217fthwl/wish/114477478 Consumption is defined as the spending on non durable goods, durable goods and services. Non durable goods are goods that are consumed shortly after purchase such as food and petrol. On the other hand, durable goods are goods that last for three years or more such as cars and technology. Services is an intangible activity and usually include non-commodity items such as education, health, and recreation. Consumption is a component of aggregate expenditure, which is the total value of spending by households, firms and the government.

A factor affecting aggregate expenditure/consumption is expectations. Expectations are the positive or negative feelings people hold towards the future state of the economy. This means that depending on the nature of a consumer's expectations, the level of discretionary spending on durable goods will be affected. For example, if the level of unemployment is high, there is little availability of jobs, and interest rates have risen, consumers are less likely to spend their income on durable items like cars and electrical items and even on discretionary items like vacations. The consumer has responded to an overall negative state of the economy. On the other hand, if the rate of employment had risen and there was high availability of jobs the consumer would likely feel more stable in the state of the economy and make consumer decisions based on their wants (I.e. spending a larger portion of their income on durable goods and increasing discretionary spending)  

Another factor affecting consumption is interest rates. Interest rate is the rate which is charged or paid for the use of money. Households borrow money to make repayments on durable items such as the mortgage on a house and cars. Higher interest rates will positively affect a consumer's willingness to save. With a higher amount of disposable income at stake in the transaction of durable goods, the option to save becomes more appealing to consumers. However, in the past eight years cash rates have decreased from 7% to 1.75% and household consumption has remained weak.]]> 2016-06-13 12:06:21 UTC https://padlet.com/jamesramseycorp/4jsk217fthwl/wish/114477478 dolid17 https://padlet.com/jamesramseycorp/4jsk217fthwl/wish/114569059 Consumption is the expenditure that households have on goods and services which are non durable or durable. Consumption is the most common form of expenditure. Some factors of cumsumption include disposable income, interest rates, wealth, expectations and government policies. These factors can all cause the overall consumption of Australia to increase or decrease.

One factor of consumption is disposable income. Disposable income is the amount of a person income which they are able to spend after taxes and other fixed expenses. If disposable incomes increase then people are more likely to purchase items showing that disposable income is a factor of consumption.

Another factor of consumption is wealth. An increase in wealth occurs when people feel they have more money as the price of their assets increase. People are more likely to consume more as the have a 'safety net' to fall back to (the assets), showing that wealth is a factor of consumption.]]> 2016-06-14 06:19:53 UTC https://padlet.com/jamesramseycorp/4jsk217fthwl/wish/114569059 matrm17 https://padlet.com/jamesramseycorp/4jsk217fthwl/wish/114569752 Consumption consists of households spending on non durable goods, such as food, durable goods such as cars, and services such as going to the movies. Consumption of these items are affected by factors, these include, wealth, interest rates, expectations, government policies, and disposal income, which has the most influence on consumption. 

Disposable income is a factor that affects the amount of consumption within an economy. Disposable income is the real amount of money that households are able to spend on goods and services, as it represents the money they have after deductions such as taxation. As disposable income increases the amount of consumption in the market will increase also. Disposable income has only increased by around 2% last year however, is still significantly lower then in recent year, such as in 2008. When comparing 2008 figure to 2006 figure this depicts a 8% decrease in disposable income. This has affected consumption as households have less money to spend of goods and services that they want.

Wealth of the consumer is a large factor of consumption. Wealth does not measure the dollar value of households banks accounts, but the value of their assets, such as their house. If these assets increase then although households do not have more money, in their bank account they feel more secure as they have asset of larger value to fall back on. When wealth increases households feel more secure so - consumption increases. When looking at recent house prices in Perth, compared to other Australian city's such as Sydney or Melbourne, it is evident that that the boom has ended in Perth with house prices falling 6% in the last 12 months. This means that consumption will decease of goods and services as households feel less secure about their financial position]]> 2016-06-14 06:33:37 UTC https://padlet.com/jamesramseycorp/4jsk217fthwl/wish/114569752 https://padlet.com/jamesramseycorp/4jsk217fthwl/wish/114570991 consumption consists of spending on non durable goods, durable goods and services. non durable goods are goods that are consumed quickly such as food and services such as education. consumers spend their income on these items but the decision of consumption is dependant on specific factors. these factors are disposable income, interest rates, wealth, expectation and government policies. 

a factor affecting the consumption of consumption was disposable income. this relates to the amount of disposable income that consumers are willing to spend on goods and services. the greater the aggregate level of disposable income in the economy the greater the capacity for consumption by household meaning that as disposable income increases, consumption for households will also increase. as a households disposable income increases, the consumption of a new car becomes relatively more available to the household to purchase. statistics show that between 1991 and 2016 as disposable income rises so does level of consumption. 

another factor affecting consumption was government policies. the government raises revenue through taxation and then spends this money. government may rise income tax to increase revenue and this would directly affect the level of disposable income of household. government may raise family payments this would raise consumption in the economy. ]]> 2016-06-14 06:51:25 UTC https://padlet.com/jamesramseycorp/4jsk217fthwl/wish/114570991 https://padlet.com/jamesramseycorp/4jsk217fthwl/wish/114571656 Consumption is defined as the use of goods and services by households. Households can consume non durable goods such as food and clothing or consumer durables such as appliances and cars. Consumer durables can last for three or more years. Households also consume services which include non commodity items such as education, health and recreation. For example doctors and plumbers. Consumption roughly made up 56% of Australian GDP in 2014-15.

One factor affecting consumption is interest rates. Households borrow credit in order to fund major purchases such as housing. Therefore the cost of credit affects the spending of households. Lower interest rates tend to have a positive effect on consumer expenditure for two major reasons. The first is that interest repayments on loans will fall and consumers will therefore have more disposable income. For example NAB interest rates are currently at 4.79% p.a. If an individual has a $500,000 home loan, they will have to pay an extra 4.79% per year additionally. If these rates fall to 4.0% p.a, consumers will not need to spend as much of their income in order to repay the money that they loaned as the added interest has fallen. The second reason is that opportunity cost on purchasing items falls, giving consumers more of an incentive to spend. The rate of return for saving is lower. For example, St George's current savings rates are 3.05%. If they fall, to 2.50%, consumers gain less for their savings. If a consumer saved $100, they would only gain an addition $2.50 rather that $3.05 with the 3.05% rate. 

Expectations of consumers will also affect the pattern of consumption of consumers. Expectations are positive or negative feelings that consumers hold about the future state of the economy. Expectations are shaped by past events in the economy such as the 2008 recession, unemployment rates or 'economic' news. Expectations will not have as much effect on the level of expenditure on basic commodities such as food stuffs. For example, if a consumer predicts that the economy will fall into a recession in 2018, they will adjust their spending so that they will be able to be financially stable in that period of time. They may start saving more money and stop purchasing unnecessary luxury items such as designer heels. ]]> 2016-06-14 07:00:26 UTC https://padlet.com/jamesramseycorp/4jsk217fthwl/wish/114571656 https://padlet.com/jamesramseycorp/4jsk217fthwl/wish/114571793 Consumption consists of spending by households on non-durable goods, durable goods and services. It is the largest component of aggregate expenditure. Non durable goods are those that are consumed quickly after a purchase, for example food and clothing. Durable goods usually last for three years or more, like white goods and cars. Services include non-commodity items such as education, health and recreation. 

Disposable income is a factor that affects the amount of consumption within an economy. Disposable income is the real amount of money that households are able to spend on goods and services, as it represents the money they have after deductions such as taxation. As disposable income increases the amount of consumption in the market will increase also.

Another factor affecting consumption is Interest Rates. Households borrow money and use this credit to fund the purchase of cars, homes, phones, etc. Interest rates can affect a consumers willingness and ability to save or spend. Low interest rates encourage increased consumption because repayments on borrowed money falls and the opportunity cost of spending on consumer items falls as saving become less attractive. Whereas if interest rates were high then consumer spending should decrease as consumers would want to save and spend less on consumer items]]> 2016-06-14 07:01:54 UTC https://padlet.com/jamesramseycorp/4jsk217fthwl/wish/114571793 tappa17 https://padlet.com/jamesramseycorp/4jsk217fthwl/wish/114572569 Consumption consists of spending of goods and services, both durable and non durable. Durable goods are ones that last for 3 years or more, for example cars or computers. However, non durable goods are ones that last short term, like food and certain drink. There are many factors that effect consumption including wealth, disposable income and expectations.

One of the factors effecting consumption is Wealth. When people feel more wealthy they have more confidence and therefore feel more comfortable purchasing more things. Wealth does not measure the amount in a bank account but the price of ones assets. The confidence is existent because the rising of price of something owned by an individual makes them feel more wealthy than they actually are.

Another factor that affects consumption is disposable income. Disposable income is the real amount of money a household is able to spend after taxation and other fixed expenses. This affects consumption as the amount of disposable income changes the amount people are willing and able to purchase. If a household has a significant amount of disposable income they are more likely to spend it more confidently rather than a household that has a strict budget and small disposable income.


]]> 2016-06-14 07:09:59 UTC https://padlet.com/jamesramseycorp/4jsk217fthwl/wish/114572569 https://padlet.com/jamesramseycorp/4jsk217fthwl/wish/114676862 Consumption:

Consumption is the expenditure of household spending items like non-durable and durable goods and services. Firstly, a durable good is a good that lasts a long period of time and is not easily perishable, these goods usually last 3 years or more depending on the good. An example of this are things like a car, computers, toasters. Secondly, a non-durable good is a good that doesn't last a long period of time and usually consumed quickly. An example of this includes items like food, pencils, clothing etc. 

In the economy, there are various factors that can influence consumption. Two of which include disposable income and interest rates. When households consider investing in something like a new house for example, they would usually borrow money from banks to help this. Interest rates can influence decision making based on the current rates. If Interest rates are low, household will generally want to borrow more because they have a greater financial incentive because they can do more with their spending money, this will encourage more spending in the economy. For example, if interest rates for mortgages is 2%, households will borrow more because they will only need to pay back a small portion of interest back. However, if interest rates are fairly high it makes borrowing seem unattractive because they have to use more money and therefore will borrow less, saving money becomes more popular which discourages spending in the economy and will decrease. For example, if interest rates for mortgages are around 20%. Households will borrow less because they feel as if they have less purchasing power and they will restrict more of their spending. 

Disposable income (Y) is another important factor when looking at consumption. This relates to how much money households are willing to spend in the economy. So, if a household has a great amount of disposable income they will be influenced by their income level and will encourage them to spend more money on goods and services. In addition to this, greater disposable income leads to the purchasing of more expensive goods and services since they can afford it. However, if a household's disposable is low, they will feel restricted to what they can buy and will spend much less on the economy than a household with a higher disposable income. Households with lower disposable will purchase less goods and services that are expensive because their income limits their purchasing power. ]]> 2016-06-15 03:24:53 UTC https://padlet.com/jamesramseycorp/4jsk217fthwl/wish/114676862 https://padlet.com/jamesramseycorp/4jsk217fthwl/wish/115124547 Consumption is the the households expenditure on durable goods, non durable goods and services. Non durable goods are goods such as food that are purchased and consumed all most immediately. Durable goods are goods that are consumed slowly after purchase and last over a long period of time. An example of a durable good is a car. 

There are many factors affecting the consumption of a household. Two of the many factors include expectations and wealth. Wealth is made up of the property and shares that a household has. These assets determines how that particular household would act in different economic circumstances. If a household feels wealthier because their property rises in value then they tend to spend more as they feel more financially secure. Therefore consumption increases and economic welfare increases. 

Expectations of households is an other factor affecting consumption as it determines how much a household consumes due to the state of the economy. If the economy is in a state of recession then households have more of an incentive to save rather than spend as they do not feel as financially secure as they would in the econonmy was in a state of boom. In this instance consumption would increase as the economy is flourishing and households are more confident with the circumstances so they tend to spend  more. 


]]> 2016-06-21 07:06:23 UTC https://padlet.com/jamesramseycorp/4jsk217fthwl/wish/115124547 https://padlet.com/jamesramseycorp/4jsk217fthwl/wish/115470064 Consumption is the spending from households on non durable goods and services. A non durable good is a good that is consumed almost immediately after being purchased, for example, food. However, a durable good is a good that lasts for three or more years, for example, a car. Consumption is a component of aggregate expenditure. Aggregate expenditure is the total value of spending by households. 

There are many factors that can influence consumption. One factor that affects consumption is expectations of households. This determines how much is consumedas  a result of the state of the economy. If the economy is in a recession then households will have less incentive to spend and have more of an incentive to save. This is because financially the households won't feel very secure, therefore they will save so they will have money to fall back on in the case of theme owing their job as an example. However, if the economy is in the state of a boom, then households will have more of an incentive to spend as they would feel a lot more financially secure. 

Wealth is another factor which affects consumption. Wealth consists of the shares and property that a household owns. These two factors affect affect how households act in the case of different economic circumstances. Households will tend to consume more if their property rises in value as they will feel wealthier and more financially secure. However, if their property lowers in value, then the household will save more money as they will feel less secure financially. This means that there is a positive relationship between consumption and economic welfare. That is, if consumption increases then economic welfare increases.
Wealth is made up of the property and shares that a household has. These assets determines how that particular household would act in different economic circumstances. If a household feels wealthier because their property rises in value then they tend to spend more as they feel more financially secure. Therefore consumption increases and economic welfare increases. ]]> 2016-06-27 00:57:48 UTC https://padlet.com/jamesramseycorp/4jsk217fthwl/wish/115470064 leea18 https://padlet.com/jamesramseycorp/4jsk217fthwl/wish/115589708 Consumption consists of the spending of durable goods, non-durable goods, and services. A durable good is a good of which lasts for a relatively long time (3+ years) e.g: white goods, car. A non-durable good is a good of which is consumed quickly after purchase e.g: food, clothing. A service is a non-commodity item e.g: doctors, plumbers. In 2009-2010 GDP was 1200n. Approximately 55% of this was consumption. 50% of consumption was on services, 35% on non-durables, and 15% on durable consumption.

A factor of which affects consumption includes government policies. These policies may encourage or discourage consumption in the economy. The government raises revenue through taxation and then spends this money on the economy. This will affect the amount of money households have to spend. e.g: Government may raise income tax to increase revenue thus affecting the level of disposable income of households directly and impacting consumption. The government does transfer payments of which is a one-way payment for money for which no money, good, or service is exchanged for to increase economic activity in the economy. e.g: Government may make transfer payments to the social welfare group for student grants. This will result in more consumption of education.

Interest rates are a factor of which affects consumption. Many households borrow money to fund the purchase of durable goods. The rate of interest will affect their willingness and ability to spend or save. Falling interest rates tend to encourage increased consumption because as interest repayments on borrowed money falls, more disposable income is available to spend. The opportunity cost of spending on consumer items falls as saving becomes less attractive when the rate of return on savings fall. When interest rates rise, consumption is discourages. The rate of interest on borrowed money increase meaning there is less disposable income to spend. The opportunity cost of spending increase as the rate of return on savings is higher. Rising interest rates may cause households to postpone consumption decisions.]]> 2016-06-28 12:59:49 UTC https://padlet.com/jamesramseycorp/4jsk217fthwl/wish/115589708