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Households | O Level Economics 2281 & IGCSE Economics 0455 | Detailed Free Notes To Score An A Star (A*)

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  • Disposable income
    • Income after all charges and taxes have been paid
  • Spending
    • Also called consumption
    • To satisfy needs and wants
    • Provide satisfaction
  • Factors affecting consumption
    • Disposable income
      • The higher the income, higher the consumption
    • Wealth
      • Wealthy people usually spends more
    • Consumer confidence
      • If consumer believe their future income will increase, then they will spend more now.
    • Interest rates
      • Lower interest rates reduces the opportunity cost of spending
      • So more spending
  • Saving
    • Income not spent
    • It can be deposited in bank to gain interest as well
    • Factors affecting saving
      • Disposable income – higher income so more can be saved
      • Saving for future consumption – like to get a house or car
      • Interest rates – high interest rates increase the opportunity cost of spending, more interest can be gained by saving than investing
      • Consumer confidence – if job feels insecure, they will save more now
      • Schemes available – if better saving schemes are available, then people will save more
  • Borrowing
    • Taking money from a person or institution
    • Banks lends to customers as well
    • Factors affecting
      • Higher interest rates, lower borrowing as borrowing becomes expensive
      • Wealthy people can borrow more as people and banks know they can pay back sooner
      • Consumer confidence that their financial situation will be stronger or that if interest will increase in the future, they may borrow today to make big purchases
      • Ways of borrowing – the more methods available, the higher the chances of borrowing
  • Expenditure patterns
    • Richer people spend, save and borrow more than the poor in absolute terms
    • Poor people spend a larger PERCENTAGE of their income
    • Poor save less percentage of their income usually than the rich.
Hunain Zia

Hunain Zia has previously achieved considerable success in the high-school educational stream, gaining a massive 154 Total A Grades and 7 Major Distinctions, a process in which he broke/ set 11 different world records, including the most A grades ever achieved, most subjects ever appeared in, most distinctions, gaining distinctions across two separate boards (Pearson Edexcel and CAIE) within the same year/ ever, and even 19 hours of constant examination. All records stand intact today. Hunain pursued his Honors Accounting Degree from the prestigious Bentley University, and then completed an LLB (in Honors) from University of London. Currently, he manages multiple social and commercial projects, has founded digital streams and works tirelessly in the education sector.

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