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Determinants of Consumer Behaviour (With Diagram)

What is 'Consumer Spending'

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Complements Can Influence Demand

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Substitutes Can Affect Demand

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BREAKING DOWN 'Consumer Spending'

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investment, net exports, and government spending. If the marginal propensity to save is in an economy, a $20 billion rise in investment spending will increase: consumption by $80 billion.

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Consumer spending can be regarded as opposed to personal saving. Many economists, especially those in the tradition of John Maynard Keynes, believe consumer spending is the most important short-run determinant of economic performance and is a primary component of aggregate demand.

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View Test Prep - questions 10 from ECON at Northeastern University. 1. The most important determinant of consumer spending is: A. the level of household borrowing. B. consumer expectations. C%(5). The determinants of aggregate supply: A) are consumption, investment, government, and net export spending. B) explain why real domestic output and the price level are directly related. C) explain the three distinct ranges of the aggregate supply curve. D) include resource prices and resource productivity.

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The most important determinant of consumer spending is disposable income. If consumers have more income, they will spend more, and aggregate demand will increase. When the economy slows down and consumers have less disposable income, they will spend less, and aggregate demand decreases. the most appropriate fiscal policy is an increase of government expenditures or a reduction of taxes. B. the most approprite fiscal policy is a reduction of government expenditures or an increase of taxes.