Grade 8C
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 here your answer in 500 Words.
Write here your answer in 500 Words.
ReplyDeleteSpending is a very common activity all human do to satisfy their needs and wants by buying goods and services. Saving is to save or keep our money in the bank or account. It is important to save in order for us to have backup or the money we’re going to need in the future. People tend to save most of their money in the bank because it is more secure and there is no doubt of even saving all of it. Borrowing can be either good or bad. When borrowing is used productively and constructively, it is good for it is well-spent, especially for capital accumulation. Most businesses borrow money for many different purposes and almost all of them are spent for useful projects and plans.
Studying about the spending, saving and borrowing is very important for the society, government and firms. These kind of activities are included as the usual discussion and topic among firms and businesses, which influence them through consumers’ spending, saving and borrowing pattern. All changes in any of these are going to be the concern of government and firms.
Consumption is done to fulfill goods and services and for satisfaction of a person. The factors affecting consumption are such as wealth, consumers’ confidence and interest rate. If we are wealthy, we tend to consume more, if we have the confidence of our future income, we also are willing more on consumption. Interest rate increases and decreases, when it increases, a person is going to save more of his/her money. But if the interest rate declines, a person tends to borrow more and spend more in the end.
The factors that determine the level of savings could include income level, interest rate, consumers’ confidence and saving schemes. It is obvious that as income rises, a person will save more, as well as for the rich who are usually going to invest market shares or capital. When interest rate increases, it is the good opportunity to save more, but when interest rate declines, avoid saving until excess. If consumers’ confidence is relative high, they will save less and consume more. Oppositely, if their confidence is relative low, they will save more and consume less. Saving schemes also determine the amount of savings a person will save, such as banks, financial institutions and post office saving.
We borrow money for different purposes. The purposes are such as to purchase goods and services, to expand business, to pay debt and to start a new business. When we do not have enough disposable income, we borrow to purchase goods and services. Businesses and firms often borrow money to expand their business or for capital creation. They could also borrow money to pay debt and start a new business. Starting a new business needs a lot of capital so borrowing plays an important role in this case.
Similar to savings, there are also factors that determine the level of borrowing. These factors can include interest rates, business’ confidence, returns on the capital and wealth. As interest rates rises, borrowings tend to fall, and as interest rates fall, borrowings tend to rise. When business’ confidence on their income increases or called as their prosperity, they will borrow more. In addition, if their returns on capital or earnings are high, they are going to borrow more as well. Last but not least, wealth or mortgage, which increases the level of borrowing as it increases.
The consumption patterns, factors determining savings, reasons why we borrow money, what determine the levels of borrowing are all examples of the important of spending, saving and borrowing of society to the government and firms. Government and firms need this information for their roles in the economy and in the country. It is therefore, the need of recording these data should be done in order for them to decide changes in the economically process.
Study of spending, saving, and borrowing pattern are very important. By studyiing soending, saving, and orrowing pattern it can helps government and firm to spend, save, or borrow moey from other company. Those spending, saving, and borrowing comes from income. If governemnt and firm know about spending, saving, and borrowing they can manage their income. For example a person work at a restaurant got $1000 monthly, he decided to spend $500 for his daily needs, such as food supply, paying his expenses, and for his needs of clothing, and he decided to save $200 for his future and give borrowing to other people with the interest rate of 5% whcih at later time he will got more money and can add his income for spending or saving.
ReplyDeleteBut if a person want to decide their spending, saving, and borrowing pattern, there are some factors that need to be satisfy and some factors that may cause them to decide their pattern. First of all, spending itself means a consumption to fulfill orur needs and wants and utility, cause each goods have its own utiity which means usefulness, factors that may help firm in deciding their spending pattern are their wealth : the more wealth they have of course the mose they spend becase if they have a big company, they will also have a big building and they will have many spending in paying the company expenses, wages, and many more. Consumer confidence : if the firm know that at later time they will got many amount of income they will spend their money not properly but if they know atlater time they will have less income, they will try to savemore money and spend less in order to save more money. Interest rate : if the interest rate falls, they will spend and borrow more because other firm that they borrow at are giving them less interest rate than it actually should be and of course they will save less because if at that time they save, they will have less interest rate and they will also spend more because the prices of the good will be lower, while if the interest rateincrese, people will not borrow because they need to pay more to the borrower because more interest rate, they will save more because they will get more money from getting the interest rate, and they will spend less because all the goods will be very expensive at that time.
But it is also important for firm to save andthere are also some factors that may effect the saving pattern of a firm such as income level : if firm have more saving they will also save more because more saving percent of income high while less saving persent of income low and it makes the rich people will be richerr while poor people will be poorer. Interest rate : people will save more if the interest rate is high because they will got more money but people will save less if the interest rate is low because they will earn less. Consumer confident : or also called future salary, if the firm’s demand is high the firm will spend more and save less but the firm’s demand is low the firm will save more and spend less. Saving schemes : there are 3 types : bank, financial, and office saving if all theinterest rate are high firm will save more.
Borrowing can be either good and bad. It depend on the value, borrow productivity and contructively if it is good it will become a capital for business. Someimes firm borrow money for producing goods and services, expand business, pay debt and start new business. And some factors that determine the labour of borrowing are interest rate : less interest rate high borrow and more interest rate less borrow. Confidence : to have good business. Return on capital : amount of money will be return.And wealth : high wealth high borrowing other firm will also want to give borrowng to that firm because they have wealth and if the company can’t pay their debt, the creditor canaje all the company’s belonging. Those are all the factors of spending, saving, and borrowing pattern and why it is useful for firm and government to study about spending, saving and borrowing pattern.
Spending, saving and borrowing is very important and must be understood by all of the people in this world, especially governments and firms. It is very important in our everyday lives and governments and firms will need to use it in their work. They will know that spending, saving and borrowing comes from incomes, which will then helps them to decide how many income workers should receive, whether they will receive it monthly, annualy, or etc. If a society has been caught spending too frequently, that is due to the interest rate that has decreased or because of the increase in their gross income. They would borrow money and spend it buying goods and services that they want, and that happens when interest rate decreased. Which is why governments create taxes, it is to receive money from people in order to improvise the infrastructure in the specific country. Spending is important but it also depends on how you spend. Spending is important when you are spending your money wisely and not wasting it so much on things that are not necessarily important.
ReplyDeleteFirms will borrow money in order to be successful. But, borrowing money from other companies won’t always have a 100% chance of being popular and become a huge success. Most people are likely to borrow money and then they would spend the money that they borrowed and return their money. This would lead us to return on capital. Companies would borrow money from other firms and they would return on capital, and if they still have some percentages left, it would be their benefit. If they don’t that means that they firm wasn't that successful as they thought it would be. Example is, firm A borrowed money 10% from firm B. And they used the money and got the total of 17%. Since they borrowed some capital from firm B, they would have to return 10% of their capital back to firm B. And their benefit is 7%. But, if it is the other way like, they borrowed 17% but they only got 10%, then in conclusion their firm wasn't a big success, but it was worth a try.
Saving money is really important to firms and governments and the society. Firms would have to save enough amount of money for their workers for their pension funds. Governments have to save money also for their country and many more reasons such as, improvements for the country and much more. Therefore, all in all saving is really important. There's basically no disadvantage in saving that is why governments want us to save money and spend less. Societies are encouraged to save instead of spending their money by increasing the prices of products, tax and etc. Also, reasons that family should save money is because possibly 5 to 7 or 10 years hence living cost and education would be more expensive, therefore they should save the enough amount of money.
In conclusion, spending, borrowing and saving are all important in their own ways and have to be accepted in our lives. Without them, some countries wouldn't be so much economically developed as they are today.
Spending, saving and borrowing is very important and must be understood by all of the people in this world, especially governments and firms. It is very important in our everyday lives and governments and firms will need to use it in their work. They will know that spending, saving and borrowing comes from incomes, which will then helps them to decide how many income workers should receive, whether they will receive it monthly, annualy, or etc. If a society has been caught spending too frequently, that is due to the interest rate that has decreased or because of the increase in their gross income. They would borrow money and spend it buying goods and services that they want, and that happens when interest rate decreased. Which is why governments create taxes, it is to receive money from people in order to improvise the infrastructure in the specific country. Spending is important but it also depends on how you spend. Spending is important when you are spending your money wisely and not wasting it so much on things that are not necessarily important.
ReplyDeleteFirms will borrow money in order to be successful. But, borrowing money from other companies won’t always have a 100% chance of being popular and become a huge success. Most people are likely to borrow money and then they would spend the money that they borrowed and return their money. This would lead us to return on capital. Companies would borrow money from other firms and they would return on capital, and if they still have some percentages left, it would be their benefit. If they don’t that means that they firm wasn't that successful as they thought it would be. Example is, firm A borrowed money 10% from firm B. And they used the money and got the total of 17%. Since they borrowed some capital from firm B, they would have to return 10% of their capital back to firm B. And their benefit is 7%. But, if it is the other way like, they borrowed 17% but they only got 10%, then in conclusion their firm wasn't a big success, but it was worth a try.
Saving money is really important to firms and governments and the society. Firms would have to save enough amount of money for their workers for their pension funds. Governments have to save money also for their country and many more reasons such as, improvements for the country and much more. Therefore, all in all saving is really important. There's basically no disadvantage in saving that is why governments want us to save money and spend less. Societies are encouraged to save instead of spending their money by increasing the prices of products, tax and etc. Also, reasons that family should save money is because possibly 5 to 7 or 10 years hence living cost and education would be more expensive, therefore they should save the enough amount of money.
In conclusion, spending, borrowing and saving are all important in their own ways and have to be accepted in our lives. Without them, some countries wouldn't be so much economically developed as they are today.
Spending, saving, and borrowing is an important knowledge for people in the economy. Spending is buying, or what we consume to satisfy our needs and wants. Most wealthy people spend more than saving. Saving is storing money. Medium level of people mostly saves. Borrowing is receiving money but also adds up our loans. Borrowing in the business can either add up the loan, or it can help the business’ growth and development.
ReplyDeleteThis study of spending, saving, and borrowing is really important for individuals, private firms, and government. It can predict the possibility of their future later on whether he or she spends, borrows, or saves. Firms also use this study to pick the better choice, which is more beneficial. Government records this to make or decide changes for his country.
Consumption pattern or spending pattern is important for government to check. He records if the pattern leads to something good or something bad. The government will make a decision. An example of the decision is tax. If the product is something the government do not really allow in the country, or it’s harmful, the tax will increase. Government sets the interest rate according to the spending, saving, and borrowing of people or firms in the country. Mostly, interest rate changes by the government depend on the saving and borrowing of people and firms.
An example of government intervention on this situation is the deflation in Japan. In the early 1990s, the prices started to fall, deflation occurs in Japan. People in Japan borrowed money to buy real estates when they have not enough money, but they borrowed since the price decreased. But at the same time, they decrease their spending because they’re expecting the prices to fall further. And if nobody buys the product, a firm will decrease its price to greater its demand. Therefore, the government in Japan sets the interest rate to zero. But, people still expected the price to fall.
To firms, they spend according to their satisfaction and the utility of the goods they buy. They will tend to spend more surely if they are more wealthy and have more money. In fact, the consumption pattern of a wealthy and poor people is different. Larger confidence gives them the confidence to spend more. Also, interest rate will affect the spending. People will spend less if the interest rate is high, but if the interest rate is low, they will most of the time spend more.
Saving for firms is important. They save in order to purchase bigger purchases later on. Interest rates will surely affect saving. The higher interest rate, they will save more because they will get more. But with low interest rate, they will save less. People save as a precaution in case their circumstances change, or, if inflation might happen in the future, he can use the money in the future. If people are more willing to save, they will. The more ways to save, the more saving a person will make. The more secure, the more saving he will make. But not everyone wants to save much. An example is a wealthy man.
Borrowing is very important for the business. It helps them to develop the business. But borrowing can result in something bad or good. Borrowing can lead to something beneficial. But borrowing could also lead to more borrowing, which adds up loans. Interest rate is a major factor when a firm wants to borrow. Higher interest rate, higher responsibility because of higher amount, which may lower the confidence of borrowing. But with low interest rate, people will borrow more. Most wealthy people won’t borrow much because they have the confidence. Which means they have enough wealth. The availability of credit will increase if ways of borrowing money is easier. But a negative side of borrowing is if people can’t repay the loan, he will be declared bankrupt or insolvent.
My conclusion is that the study of spending, saving, and borrowing is very important for firms and government to make decisions for the future.
Kevin 8C
Studying buying, spending, and borrowing pattern of a society is important for firms and goverment. So, the firms can produce whatever that they spend more on. Spending is use your money to buy any kind of things or any kind of services. If borrowing is we are borrowed an amount of money that need to be paid again someday, but there is and interest rate that will be charge on the amount of money that you borrowed. For example if you borrow 100.000 dollars, and the interest rate is 10 percent. So, the interest rate is 100.000 times by 10 percent. So its equals to 10.000 dollars. So you have to pay 100.000+ 10.000 equals to 110.000. Usually bank and other people that lend others. If saving is you keep your money. It could be in the bank or in your own piggy bank or anywhere else.in saving, there are interest rate too, but if in borrowing your liabilities will increase, but in saving, your money will be the one who increase not the liabilities. You can get interest from the bank.studying all of the above is important, because the firm can know what do the people want or wanna buy. So their products that they sell could be sold out or out of stock. If for the goverment, so they can know what is the good choice for the country. Almost all goverment and firms in every country study about their society's spending, saving, and borrowing pattern. That's why there are so many succesful firms and country in this world. example of succesful country is America, Europe, Singapore, Malaysia, etc. If the example for succesful firm is apple, Samsung, nokia, Ferrari, smiggle, beats, acer, etc. They all study the spending pattern of their society, for example:if in UK people that have highest weekly income will spend more on recreation and culture, restaurants and hotels, and transport. If the lowest weekly income spend more on housing, fuel and power. Different income or money will have different spending pattern. Most of rich people will spend less and save more. But if the poor people will spend more, but save less. Because the poor people will spend more on their needs. But if the rich people's money even already much more than enough. So that's why firms and goverment needs to study about it, so they can know what the people need, rich and poor.
DeleteFirms can evaluate their money by spending and saving. If they have high confidence, then they'll choose to spend more than to save more. Bigger firms usually spend more than smaller ones.
ReplyDeleteIts actually better if firms save more than spend more. Firms that save more than spend more usually success on the future.
For firms that spend more than the amount they save, its possible for them to have not enough money. In this case, the only thing they could do is to borrow.
Hence, on the other hand, government and banks could also evaluate to lend them money. If the firm has borrowed too much money, banks wont let them borrow more. Especially if the firm doesnt pay the money back.
Government would also need firms to spend money to get the tax. If the government doesn't receive taxes, country wouldn't improve.
Sometimes , firms borrow money to pay loan. But this is very dangerous because this may cause debt trap. Of course if they borrow money to pay loan, the money they borrowed will be loan, and if it continues all the time, the loan will never end.
spending,saving and borrowing is the activity that firms,the government and people do all the time there will be some problems that will occur if we don't manage them wisely usually firms with less money will usually borrows more and spend less but the firms who is wealthy usually spends more and borrows less
ReplyDeleteFirstly:firms who borrows money too much usually can't repay them back unless if the firms use the loan money wisely and constructively
Secondly : firms who spends too much usually end up with no money or should i say bankrupt and because their habit is spending they will want to maintain that habit by borrowing money and because the only thing that they know is spend,spend and spend they will end up with the debt trap and they will stuck in there and will never get out also the same for the government if they spend too much they will also can jeprodize the who country's economy
Thirdly:Firms that save too much will also end up bankrupt because they are so stingy that they will not spend money for their firms the wont spend for maintaining the firms and because of all the company will also go to bankruptcy
The conclusion is : that the knowledge of knowing how to manage one's saving,spending borrowing is very important because if you spend too much, save too much or borrow too much can lead you to a bankruptcy
Spending, saving, and borrowing are very important activites in shaping a country's economy. Gross income is the amount of income people earn. Later it will be reduced by taxes, whether direct or indirect, that will make it a disposable income. Spending is to buy goods and services in order to satisfy our own needs and wants. We tend to spend on goods that provide us with the most satisfaction or utility. Saving is to keep an amount of disposable income we rather not spend. Borrowing is a sum of money that is owed to a creditor, the money can be used for expanding business or purchase goods and services we don't have enough money for at the period of time. When borrowing money, we need to pay several interest rates that come with it. The more our borrowing rate or longer time we return our loan, the interest rates will become higher. When interest rates for borrowing are high, people will less likely to borrow and instead save on their money.
ReplyDeleteGovernment and firms require three of these expenditure patterns before deciding on further decisions. Usually, they collect data by sending out surveys on public polls to be filled in. By this, the government can analyse the changing in patterns per period of time. The government should also be well informed that every individual has different expenditure patterns, and are not equally the same (because of different income classes or consumer confidence, etc). According to the Trading Econmics, consumer spending in the United Kingdom increased to 244417 GBP Million in the second quarter of 2013 from 243765 GBP Million in the first quarter of 2013. This shows how fast patterns can change within time, so government must to have quick awareness. When a government know's the latest highly demanded goods or services, they can help suggesting firms into producing them to fulfill their needs and wants. The government can held programs, decide on rules or regulations, or helding events that can prevent from problems.
For example, when a government realises the lack of spending in it's economy because of high interest rates or if prices are too expensive, the government may decrease the interest rates or suggest firms to deduct.
Firms may follow government suggestions and decrease its price.
Same thing as to saving patterns. When the public saves too much of their income instead of spending, government may decrease the interest rate, people will save less because in terms of purchasing power or real value will be eroded by inflation faster than interest add to their savings value. Not only the government that will face loss when people save to much, but firms do too. When spendings are less, less consumers are willing to buy products. The firm will face a net loss instead of gaining profit.
Also, if government feels that some of its people received too little income, they can increase their wages and other values.
Besides spending and saving, borrowing is also important. Large firms first started their business with loaned money. As it is important to return back our debts, it can also lead to several problems. For instance, if someone lacks money to pay their loans, they should be careful to not lead into debt trap (paying debt with another debt, and so goes). Sometimes borrowing can be concerned that borrowing has been too easy and many did not consider its implications. When government felt that people borrow too much, they might again increase the value of interest rate so that people may feel discouraged and more careful in borrowing.
To sum it up, government and some firm intervention is useful in controlling spending, saving, and borrowing in a country. Government made sure that neither of these are too little or too much, by increasing or decreasing interest rates, wages, and providing regulations.
Firms have the duty of producing goods and services that meets its consumers wants.
Spending is a general activity done by consumers to satisfy their wants and needs by purchasing goods and services. Saving is to keep and store up something, especially money. Generally, people save up for future use or as an emergency money when needed either in hand or in a bank. People has a tendency to keep their money in banks as it is more secure than storing their money in a safe box in their houses.
ReplyDeleteBorrowing can be beneficial, but it also has its disadvantageous. When borrowing is consumed constructively and productively, it is favorable as it is used well, particularly for capital accumulation. Businesses borrow money to keep their finance charges to a minimum when the firm cannot repay in time. Also, long-term loans make it possible to purchase goods and services that might have been out of reach otherwise. Borrowing is bad for businesses if they borrow too much, making the borrowing greater than its equity, which will create a problem in the cash flow. Also, when businesses borrow money from bank, they have to pay interest rate. When firm is unable to pay back the loan borrowed, their company might get bankrupt or properties are taken away.
The study of the spending, saving and borrowing pattern of society effects the government and firms decisions. These activities will affect, consumers’ spending pattern, inflation, interest rates and consumers’ spending, saving and borrowing pattern. All of these changes will concern the firms and government.
Consumption is using up of money to satisfy consumers’ wants and needs. They ought to spend money by their personal taste, wealth and consumer’s confidence. Everyone has different taste when choosing things. When a person gets a higher income, they might spend more on things they like would consider to pay for it. Some consumers are willing to pay a high-class brand product, they must have a high confidence in them.
We borrow money because of three simple reasons. They are, to buy goods and services, to pay loans and to start a new business. Some people might want to buy goods and services, so they would borrow money first and repay their debt after they get their income. Some firms borrow money from a company, when they are not able to pay their loan, they would make another loan with the bank. Sometimes, people who want to open a new business don't have enough money. Instead, they would borrow money to open their business and would pay back in the future.
People save their money based on different factors, such as, returns on capital, business’ confidence and wealth. Businesses would prefer to save money if they have a higher amount of profit, to be used when it is needed. Some businesses are confident enough to spend all their money, but some would rather save up when there is emergency in the future.
Consumers’ patterns of spending, saving and borrowing can affect businesses as well as the government. Changes of these activities will influence of their decisions.
Monique 8C
Spending saving and borrowing is the main part of economics. We spend money to purchase goods and services to satisfy our needs and wants. We save money to purchase goods and services in the future. We borrow money to increase our spending expenditure. These are the main things that controls the decision of firms and government.
ReplyDeleteSpending amounts depend on a few things which are real income, hours worked, social changes, technological advancement, health, etc. Rich people tend to save more money than the poor people. This is because they have more money and have more money left after spending them for their needs and wants.
Spending is important for firms and government because they need to know what is the spending pattern. Through this, they will know what goods and services to sell to the people. If they don't know what people want to see, they will make a loss. Firms will also spend money to buy goods and services to sell them at a higher price.
Saving is one of another key factor in economics. Amount of money save depend on 4 major factors which are wealth, saving scheme, interest and confidence. Rich people can save more because they have more money left after buying the goods and services they need and want while poor people must buy the goods and services they need regardless how much money they have. Interest can affect saving because the higher the interest rate, the higher the return for saving which encourages people to save more. If people are confident in their future wages, they will save less because they know they will get the money back in the future.
Savings can affect their decision because they tells whether the time is right to sell things. If interest rates are high or something else, people are more reluctant to save rather to spend. Business owners will also want to save up their money to buy goods and services later on.
Borrowing is also a major thing that affects business choices. There are a few things that affect the amount of money we borrow such as interest, wealth, confidence and availability. If the interest rate is high, it means we will need to pay extra than the amount we borrow. It is also known as the cost of borrowing money. If a person is wealthy, they don't need to borrow money because they already have enough money to spend. If we are confident about our future wages, we will borrow more because they know that they can repay the loan.
Borrowing is the first thing you do when you want to start a business. Borrowing allows business to build up their business from small to large. Every business needs a start and needs money. Business borrow money to purchase goods and services that will hopefully make them more than the amount owed. Borrowing can be bad however because if we can't pay, they will take our other assets and may go to jail. Borrowing is good or bad depends on how we use it and whats the outcome.
The study of spending, borrowing, and saving pattern can be very important to help the government and firms to determine easily the people's spending, borrowing, and saving pattern or expenditure. We can know easily the patterns by census, we can ask the important people of that area to ask the bills of their spending, borrowing, and saving so the government will make an average of all of them and see the patterns to know somethings about them but we can not ask the bill of one person only, because each person has a different spending, saving, and borrowing patterns or expenditure. Spending is purchasing things to satisfy our needs and wants in our daily life, we need to spend using money and we should get that money from working and get the wages. Saving is keeping or storing our money at a secure place such as banks, safety box and many more safe place, we need to save more now in order to spend more later on. Borrowing is loaning or lending something to a person such as money, goods, and many more things that can be borrowed to somebody. Sometimes borrowing can be a benefit for us but also can be not good for us.
ReplyDeleteI will explain why the spending, saving, and borrowing patterns might be useful for the government and also to the private sectors. The first is that the pattern in the graphs is easier to be looked at rather than seeing the writing of how much they spend, save , and borrow. The second thing is that by using this patterns, they can know how rich or wealthy the consumer is and they also can see the confidence of the consumers, there are also somethings that determine someone's spending pattern, those are because the real income have risen, people work fewer hours than old time or many years ago, social attitudes of the consumers or the people who wants to buy the goods or services have changed, couples marry later in each of their life and they are having fewer children than in many years ago, people have become more health conscious, concern for the environment is growing, and the last thing that determine the consumption pattern is that technology has advanced rapidly so the demand for more advanced technology is increasing. the spending, saving, and borrowing patterns is also useful in making important decisions, so these patterns is very useful for the government and the private sectors or firms.
The conclusion is that the spending, saving, and borrowing patterns is very useful for the government and also to the private sectors and also to the firms.
Spending,saving,and borrowing patterns of the society help government and firms in important decicion making process. It is a very important knowledge to be learnt be all people.Societies spend money to fullfil needs and to buy goods and services. Saving money is very important because it can be used as an investment for the future. Borrowing money is used when we are in debt, or we want to start a business. But borrowing money to start a business is not goung to ensure you to build a sucessful and big business. But why governments need to study the patterns of spending saving and borrowing? They need to do it for various reasons
ReplyDeleteGovernment should study the spending trend of the country and try to stabilise the county's economy. If there is a high demand for food, then the goverment sjould be ready with much stock of food.
Savings trend can determine whether the country is rich or poor. Lower saving means that the country is poorer than the country who saves more money. Borrowing is also affected by the interest rates, and consumer confidence
Borrowing money could be a good investment or a bad investment. We should make full use of borrowing by using our creativity. If we use the borrowed money incorrectly, you could be stuck in a debt trap. Governments should also pay attention to the ammount of money borrowed by the country. If they are unable to pay the debts, then the country willl be bankrupt, and will have an economic breakdown. So, analysing and studying the patterns of spending, saving, and borrowing is very important for the government, and for the society.
Spending is the term for using our income to buy goods and services. The income that we use is disposable income which our income after paying the government taxes. If there are some excess money, the money can be saved for the future. If we have less money than we need, we have to borrow from another person. We will be given a deadline to pay and we have to pay the interest too. The spending, saving and borrowing pattern in a country is recorded by the government. Government and firms can use and study this pattern to make an important decision making process.
ReplyDeleteIf the government would like to run a business which do not take any profit from it, the government can study the spending pattern of the people in the country to determine the price. If people are spending more, it means the people are getting wealthier which results in higher price. If the borrowing in the country increase, it means people are getting poorer which results in lower price. By studying the spending, borrowing and saving of a country can help the government to determine whether the country is developing or not.
Firms, which search for profit, can use and study the pattern to get more profit than before. They study the pattern to determine what is the consumers’ wants and how the people consuming pattern change over time. By studying these, firm can avoid getting loss and will keep getting more profit because the firm knows what the consumers want.
The conclusion is the pattern of spending, borrowing and spending is useful for the government and firm because for the government, they will understand the people better and can make a policy that is needed by the people. For the firms, they can get more profit by observing the pattern because they know what the people or consumers want.