What's it? Consumer spending patterns are changes over time in the total money individuals spend on goods and services for personal use. They also refer to the relative proportion of what an individual consumes. Comparisons may be based on time or
Economic Context
How Exchange Rates Affect Aggregate Demand and the Economy
Exchange rates affect aggregate demand through their effects on exports and imports. Specifically, it affects the relative prices of imported or exported goods and, ultimately, their competitiveness and demand. For example, appreciation makes the
How Monetary Policy Works Affects Aggregate Demand and the Economy
Monetary policy affects aggregate demand and the economy through the money supply. For example, an increase in the money supply increases liquidity in the economy. As a result, more credit is available, and interest rates fall. Finally, households
How Fiscal Policy Affects Aggregate Demand and the Economy
Fiscal policy affects aggregate demand and economic activity through taxes and government spending changes. For example, tax cuts increase aggregate demand and stimulate economic growth.Unlike businesses and households, taxes and spending changes
How Household Wealth Affects Aggregate Demand and the Economy
Household wealth influences the decision to spend money, impacting aggregate demand. This has a significant impact on the economy, especially where household spending makes a dominant contribution to GDP.In addition, the wealth effect may be more
How Do Economists Measure Economic Activity?
Imagine a country without any way to gauge its economic performance. How would policymakers know if the economy is growing, shrinking, or stagnant? How would businesses decide where to invest? The ability to measure economic activity is crucial for
Cyclical Budget Deficit: Why It Matters and How It Works – Causes, Impacts
Ever heard the term "cyclical budget deficit" but weren't sure what it meant, especially in the context of economic ups and downs? You're not alone. Governments sometimes spend more than they collect in revenue, creating a deficit. But there are two
Government Discretionary Spending Explained (Examples & Impact)
What's it: Government discretionary spending is an item in government spending where the allocation is at the government's discretion and is implemented through an appropriation bill. The government decides what to spend in the next fiscal year
Government Revenue: Funding Our Nation (Taxes, Impact & More)
What's it? Government revenue is money earned by the government for carrying out its activities. Taxes are the main source. The government also derives its revenue from non-tax sources, such as contributions from state-owned enterprises and proceeds
Government Capital Expenditures: Boosting Long-term Economic Growth – Examples, Impacts
Government capital expenditures are a critical driver of economic growth and development. Unlike day-to-day operational costs, this type of spending focuses on creating long-term assets that benefit the economy for years to come. Think of it as an
Government Current Expenditure: Examples and Impact on GDP
Government current expenditure is a crucial concept in understanding how governments allocate resources and how those decisions impact the national economy. It refers specifically to the money governments spend on their day-to-day operations and to
Transfer Payments: Understanding Safety Nets and Economic Impact – Types, Criticism
What's it: Transfer payments are payments by the government to the private sector without having to pay for the goods and services provided. These payments do not involve the goods and services exchanged and, therefore, are not counted