eco/372
Week three/ Eco-372
Consumer Income
Consumer income is another factor that affects aggregate demand and supply. The amount of income that consumers are left with after taxes and living expenses is the amount of money that circulates and helps the economy. When consumer income is low the demand of supply and goods is also low and when the demand is low the need to supply is also low. From a classical perspective, most of these economic factors are the doing of the people rather than the government or business itself. Unemployment is caused more by will than skill which leads to the government spending too much money on those unemployed. If the American people have the expectation that if they are out of work the government should take care of them, more and more will quit their job or hang on long enough to be terminated. The income of the consumer also has more to do with the relationships and policies set between companies and their employers. Consumer income and consumer spending are large contributing factors to the economy. Overall incomes have improved slightly, but wages and salaries have fallen due to federal spending cuts that caused recent furloughs across the government. American’s are cautious about spending because of the governments’ slow economic recovery over the last few years. Income growth is not at its best so consumers will not support heavy spending. Americans have reduced savings to compensate higher payroll taxes. This is now potentially catching up the consumer who now has a decreased ability to purchase nonessential items. The government faces a questionable economy regarding consumer spending, even for years after the recession, they are still timid about making major purchases. The weak growth of overall spending is partially due to fewer demands for durable goods; such as automobiles and furniture. People complain more about spending on high priced non-durable goods; such as food, clothing, and fuel, because it is a necessity.
Consumer Income
Consumer income is another factor that affects aggregate demand and supply. The amount of income that consumers are left with after taxes and living expenses is the amount of money that circulates and helps the economy. When consumer income is low the demand of supply and goods is also low and when the demand is low the need to supply is also low. From a classical perspective, most of these economic factors are the doing of the people rather than the government or business itself. Unemployment is caused more by will than skill which leads to the government spending too much money on those unemployed. If the American people have the expectation that if they are out of work the government should take care of them, more and more will quit their job or hang on long enough to be terminated. The income of the consumer also has more to do with the relationships and policies set between companies and their employers. Consumer income and consumer spending are large contributing factors to the economy. Overall incomes have improved slightly, but wages and salaries have fallen due to federal spending cuts that caused recent furloughs across the government. American’s are cautious about spending because of the governments’ slow economic recovery over the last few years. Income growth is not at its best so consumers will not support heavy spending. Americans have reduced savings to compensate higher payroll taxes. This is now potentially catching up the consumer who now has a decreased ability to purchase nonessential items. The government faces a questionable economy regarding consumer spending, even for years after the recession, they are still timid about making major purchases. The weak growth of overall spending is partially due to fewer demands for durable goods; such as automobiles and furniture. People complain more about spending on high priced non-durable goods; such as food, clothing, and fuel, because it is a necessity.