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Different income groups, (upper, middle, and lower class) have different spending patterns for a number of reasons such as the lack or abundance of funds, financial mentality, desire vs. ability to attain luxury. Financial Priority as pertaining to social economical status also plays a large role in motivated spending. There are some who would go on to suggest that the IQ's of those in both the lower and upper bracket are directly related to their social economical status; IE, The less intelligent, the lower the status, etc. Which would, if it where the case, play another large role in specific spending patterns.
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Why is distribution of income considered as determinants of consumption?
The distribution of income is a key determinant of consumption because it affects the purchasing power of different households. Higher income inequality can lead to a situation where wealthier individuals save a larger portion of their income, while lower-income households tend to spend a higher percentage of their earnings on necessities. This disparity influences overall consumption patterns and economic demand. Furthermore, changes in income distribution can impact consumer confidence and spending behaviors across different socioeconomic groups.
How do changes in income affect the demand for a good?
Increases in income allow for more disposable income which increases spending and the demand for goods. Decreases in income conversely decreases disposable income which decreases spending.
WHAT ARE three major flow in the economy?
production, income and spending.
Consumption spending that is at an independent level of income is know as?
Transitory
Historically consumption spending in the US has?
increased as a percentage of income
Why different income groups might have a different pattern of spending and saving?
because they do not earn the same amount of income
Why different groups might have a different pattern of spending and saving?
because they do not earn the same amount of income
Why different income groups have different spending patterns?
Different income groups, (upper, middle, and lower class) have different spending patterns for a number of reasons such as the lack or abundance of funds, financial mentality, desire vs. ability to attain luxury. Financial Priority as pertaining to social economical status also plays a large role in motivated spending. There are some who would go on to suggest that the IQ's of those in both the lower and upper bracket are directly related to their social economical status; IE, The less intelligent, the lower the status, etc. Which would, if it where the case, play another large role in specific spending patterns.
Why the government spending multiplier is different form the tax multiplier?
The government spending multiplier is different form the tax multiplier from the top of my head is because the government spending total effect ripples off. That is if government spending increase then the total income increases. When total income increase, consumption increases, when consumption increases total income increases further (as consumption is a factor of total income), and this pattern is carried forward. This is the the multiplier effect, such that an increase in government spending's final impact on income is much bigger than its initial increase. The tax multiplier on the other hand, has a much smaller effect than government spending. This is because tax is only a portion of the consumer income. That is, if there is a tax cut, consumers only save a fractional amount (specifically 1-MPC) of a tax cut. As a result of the smaller boost in spending form ma tax cut, the ripples/multiplier effect of a tax cut is much less than an increase in government spending.
Why is distribution of income considered as determinants of consumption?
The distribution of income is a key determinant of consumption because it affects the purchasing power of different households. Higher income inequality can lead to a situation where wealthier individuals save a larger portion of their income, while lower-income households tend to spend a higher percentage of their earnings on necessities. This disparity influences overall consumption patterns and economic demand. Furthermore, changes in income distribution can impact consumer confidence and spending behaviors across different socioeconomic groups.
How do changes in income affect the demand for a good?
Increases in income allow for more disposable income which increases spending and the demand for goods. Decreases in income conversely decreases disposable income which decreases spending.
Which model illustrates the continuous flow of spending production and income between the different sectors in an economy?
economic cycle
What can be removed from a budget if spending is higher than income?
Discretionary spending
What is phrase that means the excess of government spending over income?
Deficit spending.
What is most easily be removed from a budget if spending is higher than income?
discretionary spending
Why should you track and record you spending and income?
We can do it
Both the increased spending by the national government and the nationally imposed income tax?
Both the increased spending by the national government and the nationally imposed income tax
