Consumption and Saving Assignment Help
Factors Influencing Consumption and Saving
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- 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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