SECTION 1: SPENDING

1.    What makes customers consume their goods and services?
·      Disposal Income: The income a person has left after income-related taxes & changes have been deducted.
·      Consumers Expenditure: The more disposable income a person has, the greater their potential to spend on goods and services or save it.
·      The low real disposable incomes a person has, they spend their money to meet basic needs.
·      The Higher real disposable incomes a person has, a person may spend far more to satisfy their wants.

2.    Why do people consume goods and services?
·      A person with a given disposable income, and faced with a set of prices and places to buy different goods and services, will consume those goods and services that maximize his or her total utility.
Examples: He buys cake too few -> he will not maximize his utility.
He buys a cake too many -> his utility will start to fall and he starts to feel sick.
·      Experience goods and services: people have experienced in consuming one of goods twice.

Three important factors that affect the level consume expenditure in economy:
C.    Wealth
Ø  It contains of a goods that have a money value. The more wealthy people feel, the greater their spending on goods and services is likely to be.
D.   Consumer Confidence
Ø  A measure of how consumers feel about the current and future of the economy, based on saving and spending.
·      If people are confident in future jobs & incomes, they might spend more in goods & services.
·      If people think their incomes fall or become unemployed, they might save more.
E.    Interest Rates
Ø  It is a percentage of the sum borrowed.
·      Interest rates high, people save more of their disposable income.
·      Interest rates low, people spend or borrow more because their loan repayments will be less. 

3.    Consumption Patterns & Trends
·      We can learned consumption patterns & trends by:
Ø  Income group
Ø  Gender and age


The factors of Consuming Trends:
A.    Real incomes have risen
Ø  Higher incomes allow people to buy more goods and services.
B.    People work fewer hours than many years ago
Ø  Increased spending on activities they like
C.    Social attitudes have changed
D.   Care to the environment
E.    Technology has advanced


SECTION 2: SAVING

1.    What is saving?
·      Saving: put the money in one place and spend later with any interests
·      Saving gives people wealthier and utility
·      Saving Ratio: The measure of the total disposable income saved in an economy

2.    Why do people save money?
A.    Saving for consumption
People often save money in order to make bigger purchases later.
B.    Interest rates
It is a percentage of the sum borrowed.
C.    Consumer Confidence
Ø  A measure of how consumers feel about the current and future of the economy, based on saving and spending
·      If people are confident in future jobs & incomes, they might spend more in goods & services
·      If people think their incomes fall or become unemployed, they might save more
D.   Availability of saving schemes
The more ways people can save; they will make the bigger purchases later on. A national scheme is a way of borrowing money from savers by a government.

3.    Saving patterns
·      Saving patterns according to our income, age, and family circumstances
·      People with low incomes are very difficult to save money
·      Dissaving: People saving money for over time to help meet their needs in the future


SECTION 3: BORROWING

1.    What is borrowing?
·      Borrowing: Take the money from people or bank and give it back later

2.    Why do people borrow money?
·      Consumers may borrowing money to meet their wants easier
Examples: people with low incomes may borrow money to pay their bills such as electricity and phones chargers
·      Personal debt: the total money of borrowing by a person or a household

3.    Reasons that determines consumption and savings:
A.    Interest rate
The rate of interest in an economy is determined by the Central Bank
B.    Wealth
A wealthy person may willing to spend more on goods and savings because they are confident
C.    Consumer confidence
People may feel confident in the future with their decisions in borrowing money.
Ø  People decides to not borrowing money if they will be lose their job
Ø  People decides to borrow money if the inflation rate increase
D.   The way of borrowing money
Ø  Some people borrowing money by using credit cards, cheques, automated payments
Ø  There are risks on using a credits, which is criminals hacking

4.    The problems with borrowing:
A.    People with borrowing more money and their incomes continue to falls, they will become unemployment or their business close down
B.    People who cannot repay their personal debt will be likely to bankrupt
C.    If there are too many people having a personal debt in one country, global financial crisis will likely to be happened
D.   The prices in the world stock market will likely to fall if many firms are bankrupt because of their consumers unable to borrow money to pay their bills
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