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ConsumerSpending|tutor2u
ConsumerSpending
Geoff Riley
9th November 2014
Type: Study notes
Levels: AS, A Level
Exam boards: AQA, Edexcel, OCR, IB, Other
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Consumer spending
In 2012 consumer spending in the UK was 927 billion out of a total GDP
level of 1504 billion
Consumption is the biggest single component of aggregate demand, in
2012 it was 61% of GDP
Many factors affect the ability of people to spend and this has a large
effect on the economic cycle
Consumer spending
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Consumer confidence
Consumer confidence is measured using surveys that ask people about
their own financial situation and expectations for themselves and the
economy.When consumer confidence is low people save more because of
fears about job security and future income.
The Wealth Effect
Wealth represents the value of a stock of assets
For most people the majority of their wealth is held in property, shares
in quoted companies on the stock market, savings in banks, building
societies and money building up in occupational pension schemes
Many economists think that there is a positive relationship between
wealth and spending although the size of the effect is open to question.
For millions of people, assets in the form of savings and occupational
pension schemes are important. So the real value of their savings and
the income that flows from deposit accounts from interest payments
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