Factors Influencing Consumption and Saving

Consumption and Saving Assignment Help

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Factors Influencing Consumption and Saving

  • Level of Income: Higher income level means higher consumption than lower income levels.
  • Income Distribution: A highly unequal income distribution leads to lower consumption while equal distribution leads to higher consumption.
  • Attitudes of People: Some people are more saving minded and thus spend less.
  • Rate of Interest: High rates of interest encourage saving and discourage consumption.
  • Taxation Levels: Higher rates and levels of direct taxes mean less disposable income and thus less consumption.
  • Expectation about supply and prices in future too affects the consumption decisions.
  • A rise in wealth reduces motivation to save and encourage to spend more. A fall in wealth may increase motivation to save and thus adversely affects consumption.


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