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Flashcards in Test 5 Deck (23):
0

Consumer

Anyone who buys goods or services for personal use

1

4 Types of Consumers

1. Individual
2. Businesses
3. Government
4. Exports

2

What is required in order to consume?

Income

3

Sources of Income

1. Income From Work
2. Income From Wealth

4

Two Types of Income From Work

1. Wage
2. Salary

5

Wage

Earnings paid by the hour

6

Salary

Earnings paid on a weekly or monthly basis

7

Wealth

The value of things that you own

8

Where does wealth come from?

1. Interest
2. Rent

9

What can you do with your wealth?

1. Savings
2. Spending

10

Factors That Influence How Much We Save

1. Wealth
2. Expectations
3. Interest Rates
4. Taxes

11

Factors That Determine How You Save

1. Safety (your money's safety)
2. Rate of Return
3. Liquidity

12

Number One Problem With Spending

Consumers can not afford everything they would like to own
Therefore they have to make choices

13

Average Propensity To Consume

The portion of a persons total income that they spent

14

Average Propensity To Save

The portion of a persons total income that they save

15

Marginal Propensity To Consume

The portion of the change of income that a person consumes

16

Marginal Propensity To Save

The portion of the change of income that a person saves

17

Paradox of Thrift

People saving more money individually equals less total income

18

Multiplier Concept

All money that one spends becomes income to another

19

Benefits of Advertising

1. Provides Information
2. Can result in lower prices
3. Stimulates competition
4. Stimulates demand
5. It pays for the media

20

Negatives to Advertisement

1. Don't inform
2. Misleading
3. Increases the cost of goods
4. People buy products they don't need

21

Advertising Strategies

1. Slogans/Jingles
2. Rational Appeal (they rely on logic and reason)
3. Emotional Appeal

22

Types of Emotional Appeal

1. Shock
2.