#economics

Inflation

• The general level of prices in the economy influences the consumer spending because of the increase in the inflation of the economy, as inflation occurs the price level changes which does impact the spending of consumers, this can reduce purchasing power as there is a increase in the prices of goods and service, thus their no currency available to purchase these goods or service.

• Inflation causes less spending, less savings and more borrowing

Age

• A person’s age impacts upon their level of consumer spending.

• A young single person may earn a relatively low income and may spend most of it on goods and services to support their lifestyle.

• As a person gets older their earnings will typically rise and they may start to save a greater proportion of their income to buy a property or in anticipation of marriage and children.

• During the family stage of a person’s life, they will spend more of their income on their children but might also have to save for their children’s university education and to build up a pension to support themselves when they retire.

• After retirement, people dissave (the opposite of saving) as they have no earned income, so must spend from their savings.

The Size Of The House Holds

• The average household in a well civilized city has only a single member, they usually prefer to marry later on their life and tend to have really less children, when a married family with 3 kids live in a single house hold, the amount of goods and service purchased would be high