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Why is production and consumption important in discussing the circular flow of economic activity?
Wiki User
∙ 10y ago
The two big influences on the economy are consumption and production. Foreign trade figures in, but for this answer it will ignored.
Normally production and consumption will be balanced. If there is, however a disturbance then the effect of one on the other will be felt. For instance, when the housing crisis hit, the immediate drop in housing sales, building and asset value, caused a prompt drop in consumption. If the effect had been much less the equilibrium point would have been reached much more quickly and smoothly, causing much less market damage. On the other had, the removal of many governmental rules and regulations which accompanied the election of Ronald Reagan allowed the production of goods and services to increase faster than consumption, resulting in an oversupply of goods and services and a consequential loering in price.
The relationship of one on the other requires that attention be paid to both of them in discussing either one.
Isadore Bauch
Wiki User
∙ 10y agoThe two big influences on the economy are consumption and production. Foreign trade figures in, but for this answer it will ignored.
Normally production and consumption will be balanced. If there is, however a disturbance then the effect of one on the other will be felt. For instance, when the housing crisis hit, the immediate drop in housing sales, building and asset value, caused a prompt drop in consumption. If the effect had been much less the equilibrium point would have been reached much more quickly and smoothly, causing much less market damage. On the other had, the removal of many governmental rules and regulations which accompanied the election of Ronald Reagan allowed the production of goods and services to increase faster than consumption, resulting in an oversupply of goods and services and a consequential loering in price.
The relationship of one on the other requires that attention be paid to both of them in discussing either one.
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What is Iraqi's most important economic activity?
oil production
Commercial flowerbulb production is an important economic activity in what country north of belgium in Europe?
Holland
A period of very slow economic activity?
A recession in basic terms. It is when the economy slows down. It is when people stop buying/selling/trading. The economy is the over all general money in a way and when it "slows down" the money gets lesser and everyone gets poorer. Economy means the system of production and distribution and consumption so when there is slow economic activity there is less of all of those. A period of slow economic activity is an amount of time where there is less production, distribution, and consumption. Generally causing a lack of money. The Great Depression was a recession in the USA and there was a lack of money because there was a lack of the system of production and distribution and consumption.
What are the Importance of consumption and savings in economics?
Consumption/saving ratio tells us about the economic activity going on in the country.If consumption would increase this would mean that there is more production of output and economic activity is at boom.On the other hand if saving would increase there would be a decrease in the rate of interest which will further boost the economy.2.Rise in C/S ration would mean that there is more production due to more consumption so output would increase and DEMAND PULL INFLATION would also increase.3.Fall in C/S ratio would mean less production and unpredictable inflation.4.Really sorry for not drawing the aggregate demand-aggregate supply diagram to support my answer.Source(s):Self study
What do you mean by consumption?
Consumption is a common concept in economics, and gives rise to derived concepts such as consumer debt. Generally, consumption is defined in part by comparison to production. But the precise definition can vary because different schools of economists define production quite differently. According to mainstream economists, only the final purchase of goods and services by individuals constitutes consumption, while other types of expenditure - in particular, fixed investment, intermediate consumption and government spending - are placed in separate categories. See consumer choice. Other economists define consumption much more broadly, as the aggregate of all economic activity that does not entail the design, production and marketing of goods and services (e.g. the selection, adoption, use, disposal and recycling of goods and services).
How is economically defined?
Economics is the social science that investigates human activity directed toward the production, distribution, and consumption of goods and services.
Is consumption a productive activity?
you have not specified consumption of what?
What is Iraqi's most important economic activity?
oil production
If a cell's diameter is doubled will the cell require two times more nutrients and would have two times more wastes to excrete?
The amount of metabolic activity inside a cell is proportional to the volume, not the diameter, so if you doubled the diameter you would quadruple the metabolic activity, and hence the consumption of nutrients and the production of waste. So, yes.
Commercial flowerbulb production is an important economic activity in what country north of belgium in Europe?
Holland
A period of very slow economic activity?
A recession in basic terms. It is when the economy slows down. It is when people stop buying/selling/trading. The economy is the over all general money in a way and when it "slows down" the money gets lesser and everyone gets poorer. Economy means the system of production and distribution and consumption so when there is slow economic activity there is less of all of those. A period of slow economic activity is an amount of time where there is less production, distribution, and consumption. Generally causing a lack of money. The Great Depression was a recession in the USA and there was a lack of money because there was a lack of the system of production and distribution and consumption.
Why is region of meristmatic activity is important in roots?
Meristems bring about the growth or buds and production of a plant, from its beginnings as a root.
What was the Production Budget for Paranormal Activity 2?
The Production Budget for Paranormal Activity 2 was $3,000,000.
What was the Production Budget for Paranormal Activity 4?
The Production Budget for Paranormal Activity 4 was $5,000,000.
What are the Importance of consumption and savings in economics?
Consumption/saving ratio tells us about the economic activity going on in the country.If consumption would increase this would mean that there is more production of output and economic activity is at boom.On the other hand if saving would increase there would be a decrease in the rate of interest which will further boost the economy.2.Rise in C/S ration would mean that there is more production due to more consumption so output would increase and DEMAND PULL INFLATION would also increase.3.Fall in C/S ratio would mean less production and unpredictable inflation.4.Really sorry for not drawing the aggregate demand-aggregate supply diagram to support my answer.Source(s):Self study
What was the Production Budget for Paranormal Activity 3?
The Production Budget for Back to the Future Part III was $40,000,000.
What do you mean by consumption?
Consumption is a common concept in economics, and gives rise to derived concepts such as consumer debt. Generally, consumption is defined in part by comparison to production. But the precise definition can vary because different schools of economists define production quite differently. According to mainstream economists, only the final purchase of goods and services by individuals constitutes consumption, while other types of expenditure - in particular, fixed investment, intermediate consumption and government spending - are placed in separate categories. See consumer choice. Other economists define consumption much more broadly, as the aggregate of all economic activity that does not entail the design, production and marketing of goods and services (e.g. the selection, adoption, use, disposal and recycling of goods and services).
