In this article we will discuss about the determinants of consumption of goods. Also learn about Engel's law of consumption. Consumption and Its Determinants: Determinants of Consumption Consumption refers to the utilisation of goods and services for the satisfaction of human wants. According to Marshall, it is the process through which human wants are satisfied, and according to Adam Smith [...]
The following article will guide you about the top nine factors determining consumption spending. The factors are: 1. Income distribution 2. The rate of interest 3. Liquid assets and wealth 4. Expected future income 5. Sales effort 6. Capital gains 7. Consumer credit 8. Fiscal policy 9. Other factors. Factor # 1. Income Distribution: Keynes believed that the MPC of [...]
In this article we will discuss about the objective and subjective factors affecting consumption spending. Objective Factors: The most important objective factors are the following: 1. The Rate of Interest: Saving directly depends on interest. When the rate of interest rises saving will increase and consumption will fall. In other words, at high rates of interest people often curtail their [...]