Grade 8A
Analyse how study of spending, saving and borrowing pattern of society help Government and firms in important decision making process.
Time Duration for submitting the Article is:
September 9th to September 15th, 2013
Write your answer here in 500 Words.
ReplyDeletePeople spend money because they want to satisfy their wants and needs. The factors affecting spending is income the higher the income the higher propensity to income of a the firm or willingness to spend amount of money on a given rise in the income of a firm,other factors such as wealth of the firm, and consumer confidence that make a firm spend more because of the firm already predict how much is their revenue in the future so they will decided if they will spend more or less, and interest rate. Governmnent also can increase inflation so people will spend less because of the increasing price of goods and service mainly because of supply can’t meet demand or government print too many coins and notes.
Saving is amount of money not consumed for purpose of future capital investment, emergencies funds, interest rate, and future consumer good. Things that determines saving are income the higher the income the higher prospensity to saving of a person or firm are more willing to save amount of money on a given rise in the income, interest rate because the higher the interest rate the higher is our saving than in the first time the firm save, consumer confidence also make firm save more because they want to buy something expensive in the future so they will save their money more, inflation make people save more because price of goods and services increase, and avability of saving schemes make people save more, also prizes like car, money, or gold from the bank make people save more to win it.
Government controll the interest rate for every bank in the country which affect the saving of someone and also make people harder to pay their debt.
Borrowing is a credit facility that allows people to borrow money ex= bank. Purpose of borrowing are capital creation and capital expansion but borrowing is not good if our spending is bigger than income or spending is bigger than capital and interest rate is higher than returns on capital and we don’t use it for productive activity. Factors that determines borrowing are business confidence to borrow money from bank, interest rate the higher the interest rate the harder the business to pay the debt, wealth as a mortgage and banking facilities for example availability of paying scheme.
The conclusion is saving, spending, and borrowing pattern is very useful to both firm and government to make important decisions.
Nicolas Samuel Lumy
8A
Sometimes information about spending patterns, saving and borrowing pattern will affect decisions taken by government decisions and firm. Especially for the government to anticipate the information needs of economic, short-term conditions, to limit the increase or decrease in the price of goods. Government regulations sometimes have to make a sudden when facing situations related to pattern spending, saving and borrowing pattern of people in a country.
ReplyDeleteIf people change their patterns, this became a threat for firm and government. Government and firms must acts very fast to response these changes. The change of pattern also makes a change in people’s behavior. It means government must have ready for new regulations so the economic condition still stabile.
If the interest rates increase, people will save more and less spending their money. This condition will make firm to give promotions and discount to their product so people still interested about their product. This situation can also happen because government makes a rule about interest rate. Maybe because of spending too high in people before make the prices of product increase very fast, if this condition continues, the price of product will very high and the poverty in that country will increase. Because of government look about this pattern, so they anticipate about the possibility on the future, they increased the interest rate so that the expense that people spend will decrease and the money that they save will increase.
If people save more and didn’t spend their money, it makes many firm will collapse or bankrupt. This condition will push a country into economic crisis. So to avoid economic crisis, sometimes government will make a new regulation that useful for now condition. Government will decrease the interest rate so the borrowing pattern will increase and more people will take their money from bank to invest in other industry. The spending also increases, because people not interested to save anymore.
The firm uses the information about spending pattern, borrowing pattern and saving pattern to predict about consumer wants and need, the kind and design about the product that they will produce, the quantity of product they will sell and produce, the price of the product and limit credit that they will give to customer who do a credit sales. This situation is set by firm to avoid the bankrupt. Firm must manage their corporation and adapt with the current situation of people. If the spending pattern is increase its time to firm sold more goods and service, search and developed a new product and new design and sometimes firm will increase the price of their product. In the other way, if spending pattern decrease, the firm will reduce the cost, give a discount and promotion and start to produce the new product.
So in conclusion, the study of spending pattern, borrowing pattern and saving pattern will useful to government and firm as consideration to take care about economic condition and economic growth in one country and to avoid the firms from bankrupt.
In economic's life there are three patterns that people always do in their life, such as, saving, spending, borrowing. Spending , saving and borrowing habit will influence the goverment and the firm in making decision.
ReplyDeleteThere are many factor that influence people in saving. For example, if the interest high, people will saving more, because they think that the return will be high. Saving money is a habit that helps us avoid many problems and helps us retain our dignity. You can buy an expensive thing with your credit card but that will mean an interest plus the actual amount has to be returned to the bank by you. Saving money in bank accounts or investing them wisely on different funds can increase the amount of sum you earned in the first place. We all want to enjoy the luxuries of life but work pressure comes between us and enjoyment. Saving money lets you retire early than you thought possible because you have sufficient money for your future in your bank accounts. From this saving habit, goverment wants to reduce inflation and decrease money cycle in people. Whereas the firm will also reduce their production cycle.
Spending more than you make is easier than you think. So easy, you might be doing it without necessarily realising it. Dipping into savings, borrowing from others, and using credit are the primary ways of spending more money than you bring in. You can get away with doing this for a few weeks or months, but soon or later, your hole-digging spending habits will catch up with you. Before you know it, your savings is depleted, your credit cards are maxed out, and you can't borrow any more money. From the spending habit the goverment wants to increase country's income, because the more people spending, the more tax that they must pay for the goverment. It also can make the firm's productivity rises.
People determine some factors why they want to borrow money. For instance, if the buissness confidence high, so the borrowing habit will be high too. Besides, if goverment makes the low interest rate, so that the borrowing habit will increase too. Borrowing money is one of the most common sources of funding for a small business, but obtaining a loan isn't always easy. Before you approach your banker for a loan, it is a good idea to understand as much as you can about the factors the bank will evaluate when they consider making you a loan. This discussion outlines some of the key factors a bank uses to analyse a potential borrower. Also included is a self-assessment checklist at the end of this section for you to complete. Here are some key points to consider. The borrowing habit will influence the goverment in making some new opportunities for employment. So that the unemployed people will also decrease. Besides, it will create many new entreprenurs who can run great buissness.
In conclusion, Spending, borrowing and saving pattern have big influence for government and the firm in making decision. The goverment and the firm have the primary key to control spending, borrowing and saving pattern for managing the economy condition.
The study of spending, borrowing, and savings patterns of the society really helps the government or firms in important decision making process. Spending is the consumption of goods and services. Spending patterns could help the firms in important decision procces such as, producing more goods and services which are in trend of spending in the society. Banks for example, could also make an important decision by studying the spending pattern, for example, that people are in trend or more people are spending more because of deflation, banks could increase the interest rate of saving which could attract people to save more because they will receive more interes rate. Spending is also depends on the income so, the government could make also an important decision while to increase or decrease the minimal wages of labour which could effect the spending patterns or trend. People or consumer who spends for good and services will have consumer confidence which means that of how confidence they are in consuming because of spending or consuming goods and services. If the consumer confidence is high they will tend to buy or comnsume more, while if they have low consumer confidence they will spend less and save more. Patterns of consumption changes because of rise or increase of real income, or they work less hour which earns more. They have the propensity to consume or willingness to consume goods and services with a given rise in income. People spend for utilities which mean of to satisfy needs and wants. People would spend less if there is inflation because goods and services would increase their price and they would spend more if there is deflation because goods and services are cheaper than usual.
ReplyDeleteThe opposite of spending is saving, which means that they save or deposit their money to the bank which the bank would give interest rate which will make or will attract more people to save at the bank. Saving patterns could also help firms and government to make an important decision. Government could increase the the income or could increase the minimum wage of a worker which could make people less saving and more spoending. Interest rate determines savings because if there is high interest rate more people would want to save because they could receive the interest rate higher. They also could have consumer confidence which is for their future or future job, if the market condition is decreasing or going lower, the trend of saving in the society would increase. The saving pattern or trend also is determine by the inflation because when there is inflation the price of goods and services rises which makes the saving patterns increases , because if they spend they would lose more money than spending it when there is deflation. The purpose of saving is for emergency funds and for future capital investment such as of that when people are wanting to build or make a business they would save firt before spending. They also would save because they need the interest rate of the bank which could increase their income. They also saves for future consumer goods because some people wants or needs to buy goods and services which needs much funds so they need to save first for the future or for the goods they want to spend.
Some people also borrow money from bank, because they have insufficient funds to build a business or to buy goods and services.
Some people also borrow money from bank, because they have insufficient funds to build a business or to buy goods and services. People borrow funds from the bank which the bank would give interest rate for borrowing. The trend of borrowing can be determined by the interest rate given from the bank which makes the people who borrow, returns the funds from bank more than what they borrow. It is also determined by the business confidence which if the consumer confidence is high the borrowing pattern or trend would also increase. It is good if we borrow funds from the bank to increase the capital
ReplyDeleteBrian.A
8A
Spending is when people buy goods and services to satisfy their wants and needs. They will consume things with the most satisfaction or utility. Our spending pattern may change when we get older. There are some factors that affect spending, such as wealth, consumer confidence, and interest rates. The wealthier people are, the more they will spend. If consumers are confidence enough that their future will be just okay, they will spend more now, not save. And about the interest rate, if it’s high people will save more, but if it’s low people will spend and borrow more.
ReplyDeleteWe can examine consumption patterns by income group, gender and age, and also over time. Firms find this information useful because it allows them to target the goods and services they produce and advertise at particular groups of consumers they want to attract to buy those products. There are some factors that influenced spending patterns such as rise in real income, people work less hours but earn more, social attitudes has changed ( behavior ), and technology. There are also some government interventions which are to protect the workers, employers, and to reduce discrimination. Government sometimes increases the inflation rate so people will spend lesser.
Saving is when we store money in a bank and take that money back some time in the future later on or the amount of money not consumed. People tend to save because of some factors, such as saving for consumption, interest rates, consumer confidence, and availability of saving schemes.
They save for consumption means that they save so they can by bigger purchases in the future. If interest rates are low, people may choose to save less and consume more, government is the one who controlled the interest rates. Consumer confidence means that people are afraid of the future; will they be unemployed or bankrupt? Will inflation rise? Availability of saving schemes means that if the way of saving is comfortable, people might be more tempted to save.
Some governments even offer national savings schemes that do not pay interest but enters people’s saving certificates into a draw each month to win prize money. A national savings scheme is the way of borrowing money from savers by a government. Our desire and ability to save is according to our income, age, and family circumstances. Some people may also spend savings they have over time to use for their living, this is known as dissaving. There are still many factors for people to save, such as future capital investment, emergency funds, and interest from the bank.
Borrowing happens when the amount of spending is greater than the amount of saving. Borrowing might be good or bad, the good things are it increases capital creation and capital expansion. And the bad things are spending will be more than income and capital and if interest rate is high, it will decrease returns on capital. When there is an inefficient use of borrowed money, it will cause debt trap. Debt trap will leads to bankrupty.
There are some factors that determine borrowing, such as business confidence, interest rate, wealth, and banking facilities. Business confidence means that higher confidence that people have, the more borrowing they will do. Different with interest rate, the higher interest rate, the lower borrowing people will do. About wealth, poor people will borrow more than the richer people, because they don’t have enough money to fulfill their needs. It is important for the government to know the nation’s borrowing rates for making decisions such as reducing it by increasing interest rates and taxation.
So in conclusion, they study of spending, saving, and borrowing pattern are very useful to government and firms because it will help them to make important decision in making process. Spending makes government increase the inflation rate, saving makes government control the interest rates, and saving makes government by increasing interest rates also like saving and increasing taxation of the nation.
Audrey Tan
8A
There are 3 way to use money, Spending, Saving and Borrowing. Spending is an activity of people to use their money for their own needs, For example, for buying something. Saving money is an activity that people do to save money for future. Most people save their money in the bank. Borrowing money is the way people do to get additional money to fulfill their needs and wants. Bank is the institution where people can borrow money. Society have different pattern of spending, borrowing and saving money. The way they use this kind of pattern depend on the income they earn from their job. Wealthy people whose have high rate of earning money usually spending their money the most, instead of saving or borrowing. And people with medium rate of earning or middle society use their money most on borrowing.
ReplyDeleteThe economic development of a country depend on the bank as institution where money flow. So, the pattern of society using their money influence the economic health of a country. A situation where people spending and borrowing money in high rates, can affect the government policy regarding Economy, because if the the total of spending and borrowing of people increase, the interest rate will increase. If the government do not control the interest rate, it will affect the society, especially their capability to repayment or spending money.
The interest rate is very important for people who decide to borrow money from the bank, because if the interest rate become higher the total borrowing money also become higher,and they have to repay larger. Of course this will effect their capability to repay their debt. If this happened, the people capability to buy something they need become lower, vecause they have to divide the money they earned not only for their needs but also to repay the debt.
In the develop country like Indonesia,where Economy still growing, the consumer are the major actors. Consumer or people who spending their money, contribute in the government main earning instead of taxes. In Indonesia where, middle class it the majority of economical society, borrowing money is the common way to get extra money to fulfill their needs. There are some needs that people have to get extra money especially by borrowing, before they can spend their money. The example is education, house, and transportation. Most people in Indonesia spend their money for this kind of needs, by installments or by borrowing from banks.
The conclusion is government have important rule due to produce policy regarding the pattern of people using their money because it can affect the economic capability of the society especially when the interest rate increase.
-Celia Pricilla Mesatania 8A-
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ReplyDelete
ReplyDeleteWe can study the spending, saving and borrowing patterns in a society; they can help the government and firms in making important decisions. People from time to time will always spend, save and borrow. Spending, saving and borrowing are determined by the income of the people. Spending happens when people give out money to consume goods and services like buying things. The pattern of spending depends on how rich the person is, so rich person can spend more compare to non-rich person. There are several factors why spending pattern changed. Here are some factors; first, people with high real incomes have risen, real income is the income that they received after it is subtracted by the direct taxes. So they spend more to satisfy their needs and fulfill their wants. Now, people can work fewer hours than before and they earn high wages. Government find it important because they can know the increase in supply of goods like providing public good such as roadway, bridge and merit good like hospital, school and other buildings. Saving is the money that is not used by the people. They can save the money in the bank. Saving can be determined by three factors.
When the income is high, people will also save more. Then, interest rate can be one of the factors, if there is high interest rate, the higher the saving because people can get more money.Lastly, high inflation can make higher saving because the price goes up.From this, firms can reduce production of goods due to the decrease in consumption of the goods; the effect of the firms that don’t know the patterns of saving in the country will produce more goods but people will consume lesser.
In borrowing, this tells us that spending is higher than saving. Borrowing has good and bad reasons. Why is it good? Because it helps to make capital creation and capital expansion and it is useful to both government and firms to make the decision in producing something. While it is bad because their spending is higher than income and capital, also, interest ratio is higher than returns on capital. The effect will be debt trap. Dept trap in other word means cycle of borrowing. People can get trap in the cycle because they keep on borrowing from one person to another. Debt trap can happen because of two factors, first, the people are insufficient funds or they don’t have any money to pay something like bills, school fees and living costs. Second, inefficient use of money, this means that they borrow the money to do unimportant things and it makes their loan increases. Government can increase the interest rate to make the people to earn more money from the bank to recover the loan they made. Aside from that, government can cut the banking facilities such as credit cards, this is one of the reasons why people get trap in borrowing cycle, people keep on using credit cards and set it as a habit as now they cannot control their buying habits while using credit cards, interest rate will be high.Government can help to increase the interest rates to help the people to get more money so they can pay the loans and government also can decrease the price to cut the amount of borrowing.
In conclusion, government and firms decisions in making processes can be determined by the spending, saving and borrowing patterns. The use of government to know this is because the government can control situations of the society.
- Felicia Angeline 8A -
People spend to satisfy their wants and needs that is urgent in the present time. People usually put necessities like food or clothes as their top priority in their spending list. But sometimes people do spend things on unnecessary stuffs like accessories. People also save money for future needs like education, interest rate, future consumer goods, or sudden emergencies like medical services, bankruptcy, or debts.
ReplyDeleteSo the government need to do something so people will save more. Spending and saving patterns can help the government in important economical decisions. The government could observe the spending pattern of a society and can use it to whether increase inflation or not. The government increase inflation so that people will not overspend their money and will save more.
People need to save more so that they will be prepared for emergencies. Interest rates are high and the option of reducing inflation by increasing interest rates is not applicable in this scenario. Level of risk taking in the economic sector has gone down drastically. People have become risk averse and highly defensive of their original capital.
Government have the control over all the interest rates and every capital price. So the government have to choose whether to increase the price and increase inflation of the goods. If the price of goods if high, people will save more than spend. Therefore, they would use their saved money in the future to buy the goods which have high prices.
In example, Oil. Oil is a valuable resource, and now oil is getting scarce. Because it is valuable, therefore the price is very high. But today oil is scarce and the more they are scarce, the higher the price, making it extremely high in price. This will cause changes in the spending pattern of the society. People will save more and spend less, so they can buy the oils later.
Also, the government need to encourage people to save more for retirement. The sooner people start saving for retirement, the less they will have to save in the future. They can put their money to work for them. As they continue to contribute overtime they will be earning more interest on the money they have, then they put in each month. They should at least be contributing up to their employer's match and eventually they will want to contribute ten to fifteen percent of their gross income.
Government uses the information about the spending and saving behavior of the society to limit the increase and decrease of price of goods. They could also decide whether they would increase taxes and interest rates. With high interest rate, people think they might get a high return from the bank.
Borrowing is when people take money and return it to the person who they borrow money from. People borrow because they have insufficient funds and they have to buy something to fulfill their needs and wants now. Later, after the person is financially secure, the person will return the money to the person whom they borrow money from.
Spending pattern, saving pattern, borrowing pattern, shows how people consume and use their money. When people get their income usually, they will decide how much money to be spend and how much money to be saved. Sometimes people lack of money to spend for sufficient their needs and wants. So they will borrow money from bank or from their relatives. The reason why people save are to prevent unefficient spending and saving for their future or some sudden needs and wants. Borrowing pattern, saving pattern and spending pattern, makes behavior of people changes. The behavior changes will affect condition economic for global, so the government and firms must warn about the change of people behavior.
ReplyDeleteWhen the interest rate is low many people will borrow money from bank. When people have more money than usuall, they will spend more from their money, whats why the firm will grow rapidly . but the problem is, if money distributed more in society, the price of the goods will increases, this called INFLATION . for some reason, when the interest rate is low, many firms will borrow money to expand their business and will research and developt for new product and services. It makes the growth of the firm will increase and some new product will appear for increasing the chosen of costumer to satisfy their needs and wants.
Usually when inflation happens just like the statement above, people will disapointed about goverment because the price of product and services (especially needs) keep on increasing. So the goverment makes a new rule just for this situation, goverment will increase the interest rate for a reason for people saving their money. When people save their money they will reduce their spending or expenses, this kind of situation will make the price of the product decrease. People that wants to borrow money , will postpone thair plan because if they still borrowing money, the interest rate that they will pay will be extremely high.
But, if people keeps on saving, the new problem will appear. The problem is less people will spend their money to buy goods. It cause the firm will not in a good situation, they must reduce their costs of sales, must reduce labour, even the worst case is the firm will bankrupt. If a lot of firms bankrupt , the economic condition will become economic crisis. When the economic crisis appear, another problem will begin, such as , unemployment will increase, poor property will increase and many firms will collapse. In this conditions government will give subsidy for their people, usually for firm to keep up their business sometimes, the interest rate also changed by government to make the economic condition stabil.
IN CONCLUSION saving pattern, spending pattern and borrowing pattern, will influence the decision of government and firm to act. Every decision that they make, depense on condition that cause by spending borrowing and saving pattern. If people spend more the government will try to barrier the price of product so that the price doesnt increase anymore.
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ReplyDeleteGovernment and firms need to consider several factors when making crucial decisions. Three of the most important factors are spending, saving, and borrowing patterns of the society. Spending is to pay out (money) in exchange for goods and services. Saving is the portion of disposable income not spent on consumption of consumer goods. The gross income people earn, after deducted by direct tax, will become disposable income. Disposable income can be either spent or saved. If spending is more than saving, people are most likely to borrow. Borrowing is “receiving something of value in exchange for an obligation to pay back something of usually greater value at a particular time in the future.” (- businessdictionary.com). When borrowing, it is necessary to pay interest. When interest rate is high, people will decrease borrowings and increase savings , as borrowing will be more expensive and savings will yield more financial benefits.
ReplyDeleteBoth government and firms would need to do surveys and researches in the society to discover the general spending, saving and borrowing patterns of people. The results would help governments to implement programs, regulations, or rewards, and help firms to create products the market wants. By investigating the total or average spending of a society , the government could keep up on the changes of spending patterns, and the reasons. The government would also be able to differentiate different spending patterns in the society. For example, by continuous researches, it was discovered that in Australia, the consumer spending has increased from around AUD175.000 million in January 2008 to around AUD200.000 million in June 2013 (- Australian Bureau of Statistics). This is interconnected with other economic indicators such as increased wages, increased disposable personal income, increased employment, falling interest rates, and falling inflation. Government would make use of this information to make decisions such as programs to encourage savings by increasing interest rates, and increasing taxes on goods and services. Firms would benefit from increased spending, as their profits will rise. With increased spendings, firms might consider expanding their market power by opening new branches or increasing prices for more profit, as there is a high demand for their products. However, they should also take in account the falling demand if prices rise, especially if they are producing goods with elastic demand. People save for future capital investment, emergency funds, to purchase future consumer goods, and to earn interest from bank. Changes in saving patterns would affect the government. If less people save, it is likely that national savings would decrease, unless public savings increases. National savings is used to make government purchases in the future, therefore, the government might fall into debt if national savings is negative. When stock market prices are low, people would save less and invest on stocks, as it is cheaper to buy and would yield more benefits later. Acknowledging savings patterns in a society would help the government to make decisions. If savings are low, the government might increase interest rates to encourage people to save. The average household savings of Australia, for example, has increased from only 3.8% in January 2008 to around 10.9% in June 2013 (- Australian Bureau of Statistics). Firms would make a loss if savings are too high, as it means spending would fall. Firms would need to lower prices to encourage people to buy their goods and services. They would give discount, special offers, and any other marketing tactics to sell their products.
The last factor to be discussed is borrowing. Borrowing could be either good or bad, depending on the reasons why the individual borrow. Borrowing is good when it is used for capital creation or expansion, but is bad to buy non-capital goods which would only fulfill an individual’s wants, for example, a luxury car, a new house, etc. Borrowing is bad when interest rates are more than returns on capital. If a firm borrows with 10% interest to be paid back, and the returns on capital is 15%, it is good to borrow, as there would be a profit of 5% for the firm. However, if the returns are only 5%, it is a bad decision to borrow, as the firm would face a 5% loss. People could fall into a debt trap which would lead to bankruptcy if they could not pay their debts. High household debts could hold back the country’s economic growth. Government could control the borrowing of a country by increasing interest rates, so people would need to pay more interest when borrowing, discouraging them from borrowing. There is a possibility that borrowings rise because of increased spending. After all, most individuals borrow to spend. Firms are likely to benefit from increased borrowing at a short span of time, but if the country falls into recession, many firms could go bankrupt and shut down. Borrowing could be reduced by external factors such as inflation. If wages increase due to inflation, but debts remain fixed, the debts can be more easily retired. Economists may advocate increasing inflation to help reduce the debt burden in highly-leveraged economies. For example, economist Kenneth Rogoff has advocated both mortgage write-downs and inflation during August 2011: "I argued that the only practical way to shorten the coming period of painful deleveraging and slow growth would be a sustained burst of moderate inflation, say, 4–6% for several years. Of course, inflation is an unfair and arbitrary transfer of income from savers to debtors. But, at the end of the day, such a transfer is the most direct approach to faster recovery. Eventually, it will take place one way or another, anyway, as Europe is painfully learning." He also suggested that the government could take an equity interest in the homes in exchange for paying down the mortgages. (- wikipedia.com)
ReplyDeleteIn conclusion, spending, saving and borrowing patterns are important for government and firms to make a number of decisions. These decisions involve fixing the economic system for the government, normally by increasing or decreasing the interest rates. Firms would need these information to help decide what produces they should make, at what price they should sell them, and other decisions to ensure their income is positive.
The spending,saving and borrowing pattern will affect the government's decisions because each person's rate of spending, saving and borrowing is different and spending rates is determined my the income they receive minus the direct taxes which will result the disposal income. The disposal income can be used for us to consume (spending) or save it, if we spend it means that we will use the disposal income to satisfy our needs and wants but if we prefer to save the money it can be useful for our self in the future for example we use it for our family to buy a house so we have a shelter or maybe the money will be useful when we gets old and we need money to go to the doctor and receive treatment or medicine to make us healthy that will takes a lot of money especially when we have a disease like cancer or heart attack it will need a lot more money because cancer and heart attack is the most common disease and it's really hard to get healed from it. There are some reason why consumption pattern may changes: 1. There is a rise in real income, real income is income adjusted with inflations, inflations is when there was a continuous rise in average price of goods and services. 2. People willing to work in less hours but the receive the same amount if they work longer hour. 3. Social attitudes/behavior has changed which means they choose to save more rather than to spend their income. 4. Technology is now improving very fast and it getting advanced. 5. Health conscious they get more educations that we need to get more healthy. Saving will be useful for future capital investment or for emergency funds needed, it is determine if there is high interest rate there will be more people to save. When spending is bigger than saving people tends to borrow money from bank or other people and if we have insufficient amount of money/funds to pay our dept we may get trapped by the dept trap which we spend and then we borrow money but the banks gave high interest rate so we borrow from other to repay the bank but than the other people also gave high interest rate and this cycle keeps go on and this leads us to bankruptcy.
ReplyDeleteThe conclusion is each people has their own needs and wants so some people may choose to spend than to save but other people choose to save than to spend their income, and people that aren't diligent enough may spend more until they are trap in the dept trap and sooner or later they will get bankrupt so the pattern of spending, saving, and borrowing will affect the government and firms decisions.
Spending is to use our money for consuming or purchasing goods or services. We spend to fulfill or satisfy our needs and wants, like buying food, book, etc. Saving is the amount of money we don’t spend, that we keep in different forms, like deposits. Borrowing is the money that we receive but must pay back to a person, group, or organization, such as a bank. Saving, spending, and borrowing pattern of a society means how the society use their money, either spend, save, or borrow in different levels, such as a country spends a few percent more than another country, etc. Spending is determined by a few factors, such as the amount of income, wealth of the person, the consumer confidence, and the interest rates. Saving can be influenced by a few factors, like the amount of income the individual receives, the interest rates of the banks, level of inflation, and the availability of saving schemes. Borrowing is determined by interest rates, wealth, consumer confidence, and the availability of credit.
ReplyDeleteGovernments need to study about the patterns of spending, saving and borrowing in their area. By learning about the spending patterns, they can intervene to minimize problems. In developed countries, the pattern of spending for housing, household goods, and services increases slowly since 1984 to 2008 from about 31% to 34%. Similar to housing needs, entertainment and health care in percentage of average income also increase from about 4% to 5.5% and 4% to 6% respectively. This is found in the US, and also found in most developed countries, as a result of a number of factors, including rise of real income, people work fewer hours than many years ago, change in social attitudes, people are more health conscious, growing concern for the environment, and the advancement of technology. The government needs to know the spending pattern for a number of reasons, such as to help the society, reduce problems, and provide goods and services. The government can use the pattern to help the society, for example, when the country’s consumption pattern for television increases and the pattern of telephone line decreases, they can help by decreasing the supply of telephone lines to save energy and encourage local entrepreneurs to make television business, which can help by providing job fields, or encouraging entrepreneurs from other countries to invest in the television business to help local businesses run.
Other than governments, private sector firms have their reasons to learn about the society’s spending pattern, including finding out their market share, and finding out best location for selling. To find out their market share, they will try to look at the spending pattern of their market, and determine how many percentage of the market purchases their product, for example Pepsi studies the spending pattern of their market and sees that most people prefer buying coca cola, so they will try to improve their brand so people will buy. Firms also can find out the best location to sell their goods or services by analyzing the consumption pattern from different locations, for example, Pepsi again, before launching, they might analyze the consumption pattern of a country, and if the level of consumption for soft drinks is low, they might not sell there but if they see the level of consumption for soft drinks are high, they might consider launching or selling there instead. Studying saving patterns are also important to governments and private sector firms. When the government learns that the saving pattern of their country is falling, they might try to make more available saving schemes, or slightly raise the interest rates, etc to attract people to save more than spend because they can get out of control and may borrow much money and there might be a lot of bad loans. Or the other way around, if the government found out that the saving pattern is increasing, they might try to reduce the interest rates to reduce people being unable to pay back loans and to make sure people still spend ENOUGH money so that small firms can survive. For private firms, learning the saving pattern of their market can be important, such as to determine what goods or services to make. Studying the borrowing pattern is also important to both private firms and/or government. When the borrowing pattern is seen to rise, governments might try to discourage borrowing like running programs or reduce bad loans by decreasing interest rates. Private sector firms might need the information to determine the price of their goods or services, for example if the country has a high level of debt, most people would not spend much, so firms might have to lower their price, or a high level of debt might mean people spend more so they might have to rise their price.
ReplyDeleteIn conclusion, the patterns of saving, spending, and borrowing is important to be studied and analyzed by both the government and private sector firms to help them either to accomplish something or to help the society.
Ivan Alexander, 8A
Spending, saving and borrowing pattern can help government and firms to make decisions. Spending is when we buying or consume goods and services to fulfill our needs and wants. We spend or consume for daily living expenses, for major expenditure, and for recreational activities. Saving is the amount of money not used for consumption. We save for long-term financial security. And borrowing is the negative income, happen when our spending is higher than our saving. This 3 factors are called disposable income, which can help government and firms to make decision process because government and firms can see how their society behaves, their condition (rich or poor) and to make the value for the interest rates.
ReplyDeleteGovernment and firms will analyse the spending, saving and borrowing of their society. This can help government and firms to decided the price on the markets and the value for the interest rates. Because if the firms give the high price on the market, while their society don’t have enough income, they will not get any profit. For example, country A have very low spending pattern, while the government and firms give the high price on the market, so their market will not get any profit. And if the government give high interest rate, the society will do less spending, because interest rates is a cost of money, which can hurt our economic growth when we consume goods. Government also look the saving of their society. If there is high interest rates at the bank, there will be many people that will save at the bank, because interest rates cn increase our money at the bank. And if the society income is high, they will do more saving. People do saving because of some reasons, for emergency funds, for future capital investment and for consumen goods. For example, China’s government give high saving rate, so the saving rate in China is very high, compare with USA and UK. China saving rate reach 38% of GDP, because the banking rate in China is high, while the saving rate in USA is 2.5% and UK is 3%. Changes in saving patterns would affect the government. If there are less people do saving, the national saving will decrease and the public saving will increase. Government decision also affect their society pattern in borrowing. Because if the government give high interest rates, there will be less people do borrowing, because if people borrow money, they have to pay for the interest rate, if they can’t pay that, they will borrow again and again, it never stops, until debt trap happen, and lees to bankrupting.
Against the statement above, spending, saving, and borrowing really affect the government and firms in making decisions process. Borrowing happen because good and bad factors. It’s good when the capital creation and capital expansion rise. It’s bad because borrowing happen when spending higher than income, spending higher than capital (we spend more money than what we need) and borrowing is bad when interest rate is higher than the returns on capital.
In conclusion, spending, saving and borrowing are very important for both government and firms in making decisions. To know whether they will decrease or increase the interest rate. And to decided the price at the market.
Vienetta Christina
8A
In this world,people always spend,save and borrow.They consume to satisfy their needs and wants.They save money in banks to get interest.They borrow to pay back their debt.This 3 things always happen in real life,they can't disappear from our lives.Every human has a different spending,saving and borrowing pattern.All these patterns effects the firms and the government.Firms and the government needs to observe each of our spending,saving and borrowing pattern so that they can be successful in choosing their decisions.Our spending patterns differ mostly because of income.A person with higher income would spend more than a person with less income.Firms needs to carefully observe these so that they can decide whether to make a product that most rich people need or a product that only the poor will buy.If they didn't observe people's spending pattern they would've made a wrong decision.Spending patterns also differ because some people has a child to take care of.A person with a child will gladly buy goods to satisfy that child's needs and wants eventhough it will cause him a lot of money.Firms needs to make this an advantage for them.They should make more toys for babies that would make a lot of babies beg their parents for that toy.Parents would certainly be happy if their babies are happy.So they would surely buy the toy for their babies.Firms could also choose to sell foods for babies or clothes for babies.Now people will spend a lot of things for their babies rather than for themselves.They would spend most of their income on their son rather than spending their incomes for themselves.Other then firms,governments should also observe different spending,saving and borrowing patterns of the society.They could help people using a tool called rate.If the society saved more than they spend,the government might increase the interest rate so that they can benefit savers more.If they saw a change in patterns they should quickly respond to it,if the society spend more than they save they should respond by decrease the interest rate so people won't need to pay much more to buy goods and services.When people borrow,the government needs to also act.They decrease the interest rate when people borrow so that they can lessen the burden of a borrower and not let that guy go bankrupt,if the interest rate stays high then if people borrow,they would likely fall to the debt trap and it will lead to bankruptcy.The government doesn't want this to happen,they don't want their people to go bankrupt,that's why they need to observe the societies borrowing pattern.Firms could also benefit if they study the saving pattern of a society.If they saw that the society started to save more than spend,they would lessen the production of their goods and services so that they won't produce too much goods and services and increasing their cost of production without knowing that people started to save money.That's very bad because if that happens often that firm would get a loss when doing business,not profit.These are why firms and governments needs to study the saving,spending and borrowing pattern of a society.
ReplyDeleteJovan Pan
8A
Many people spend because they want. After they spend the money they are satisfied because their want and needs is satisfy. the other is savng. Saving is to save money for future expense. Borrowing is to borrow money from debtor. Many people have diferent spending, saving , borrowing factor. The factor of spending because they have money. They can buy anything they want. If they’re out of money they need to borrow from the debtor. after they borrow they can use it for saving or spending.
ReplyDeleteSpending can be good and can be bad. The good side is that spending is for satisfy wants and for buy a good things. The bad things is too much spending can make you borrow from other people. If your spending is bigger than your borrowing and income you cannot pay for the borrowing and you fall to the debt trap. To prevent the debt trap we must spend less than income and save some to pay the other debt. The good about borrowing is that if we use for capital creation for example we add it for the business capital. The other bad things about borrowing is if the interest rate is high. If the interest rate is high we must return the money more higher than the borrowing. The other is if we cannot pay now we must pay more than the borrowing. What determine borrowing for the bussiness is because business confident is high and the business is sure that the business can pay all of the money. The other factor what determine borrowing is interest rate. If the interest rate increase the income or wages will increase too so the people no need to borrow anymore. The other reason is the wealth of the people. If they are rich they no need to borrow money for other things.
Saving is to save money for future expenditure. People save money because they save it from another things like inflation so they need to save it and wait until the deflation happen. They can wait until the price fall. The other is spending. Spending is good for consumer needs and wants. They can satisfy it by buy a things that they need and wants. The china have a high saving rate than the usa and other country. the china saving rate is 38% of GDP. The UsA only have 2.5% and the UK only have 3%. The saving of a people is affecting the saving rate. If the people do saving the saving rate will increase and if the people save less the saving rate will decrease. The government give a high interest rate for borrowing because the government want to decrease the borrowing and increase the saving of a people. Spending also affect the spending rate and saving rate. The people spend less now because the government give a high interest rate for the borrowing and taxes for the spending.
The point against it is that government save us from the borrowing. The conclusion is that spending, saving, and borrowing affect all the rate in the country.
We got salary from our job. Then the money is used for spending, saving and borrowing. Spending is for buy goods and services. It is needed to satisfy human needs and wants. The example is for buying foods. Saving is money that we don’t use or it is not used for consumption. Usually we keep it in bank. It is used for investment, emergency funds, etc. Borrowing is money that we got from others, but we should return it back to that person. Borrowing can happen when the spending is more than saving.
ReplyDeleteSaving, spending and borrowing pattern is important for government and firms. Actually, there is a relationship between income, spending patterns, firms, jobs, economic growth, and government. The higher income of the people in a country makes the spending pattern is increasing because of want satisfying power or utility. Because of the spending patterns are increasing, so more firms will need more people to work in that place. Because of the needed of people in some firms, they will make more people work. It can reduce unemployment people. Economic growth in the country is increasing also. And this country can be classified as a ‘quiet’ rich country and developed country because there are less unemployment people. And it makes government easy to control in financial side. If there’s less income, the spending pattern is also decreasing. When the spending pattern is decreasing, then the firm won’t get any profit. And many firms will close. And because of the closing of many firms, there will be more people that don’t have work. There are many unemployment people. And it can hurt economic growth, then the country can be classified as undeveloped country and poor country because there are many unemployment workers. It makes the government hard to control in financial side. So the government and firm should know the income of the people in that country. Also in specific goods, firms need data to know the spending patterns of people in that product. Is the good that sell is needed.
So the conclusion is spending, saving and borrowing pattern of society help government and firms in important decision-making process for the reasons above.