Influences on Spending, Saving and Borrowing

What does disposable income refer to?

• Income after spending

• Income after saving

• Income after taxes

• Income before taxes

What is the main reason people engage in consumption spending?

• To invest in stocks

• To gain satisfaction or utility

• To pay off debts

• To save for the future

What is the main factor that affects how much people save?

• Disposable Income

• Consumer Confidence

• Interest Rate

• Price Level

Under which circumstances are households more likely to save?

• A

• B

• C

• D

What is the cost of borrowing or the amount of money earned from saving or investing in bonds?

• Price Level

• Interest Rate

• Consumer Confidence

• Disposable Income

What is the level of optimism that consumers and businesses have about the state of the economy called?

• Disposable Income

• Price Level

• Interest Rate

• Consumer Confidence

What must be occurring if consumption is less than disposable income?

.

• Borrowing

•    Income levels are falling.

• Income is being redistributed to the poor

• Saving

What can cause a fall in saving?

• A rise in the range of financial institutions

• A fall in the rate of interest

• A rise in disposable income

• A fall in the rate of tax imposed on earnings from saving.

 

What is most likely to cause a rise in consumer spending in an economy?

• A rise in confidence

• A rise in income tax

• A reduction in wealth

• A more uneven distribution of income

How does an increase in disposable income affect consumer spending?

• It encourages consumers to save more.

• It decreases consumer confidence, leading to less spending.

• It allows consumers to spend more on goods and services.

• It has no effect on consumer spending patterns.