consumer income

• How does inflation affect consumer spending?

  Inflation affects how much people spend, as they may feel they have less money if their income doesn't increase at the same rate as prices.
• What happens when income increases faster than inflation?

  If income increases faster than inflation, people may spend more.
• What are the effects of income rising at a slower rate than inflation?


  1. People spend a greater proportion of their income on necessities.
  2. Less money is available for luxuries, leading to decreased demand for luxury products.
  3. Businesses providing luxuries may suffer from lower sales and profits.
  4. Discount stores may see an increase in sales as consumers seek cheaper options.
• What are the consequences for businesses when income rises at a slower rate than inflation?

  Businesses that provide luxuries will suffer, leading to lower sales and profits.
• What strategies might businesses use to counteract lower profits due to decreased demand for luxuries?

  They could lower their prices or spend more on advertising to increase demand.
• What happens when income rises at a faster rate than inflation?

  1. People spend a smaller proportion of their income on necessities.
  2. More money is available for luxuries, increasing demand for these goods and services.
  3. Businesses providing luxuries will see an increase in sales and profits.
  4. Discount stores may experience a decrease in sales as consumers worry less about prices.
• How does an increase in income affect discount stores when income rises faster than inflation?

  Discount stores may see their sales and profits go down as people start worrying less about getting things for the cheapest possible price.