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Unformatted text preview: AS Macro EW - Consumer Spending in the UK Economy This EW focuses on changes in the level and pattern of consumer spending on goods and services. Consumption (C) is far and away the largest component of aggregate demand (AD) so understanding the factors affecting consumption is important in explaining changes in the economic cycle and also the impact of consumer spending on the rest of the economy. Chart A: The components of aggregate demand Chart B: Changes in UK consumer conFdence Consumer conFdence is an economic indicator that measures the degree of optimism that consumers feel about the overall state of the economy. Extract 1: Families suffer sharp fall in their real disposable income Families disposable spending power in Britain has fallen by 730 over the last year due to the higher cost of living, according to supermarket Asda. Higher petrol, food and utility prices are behind the fall in spending power. Ination is running at 4.5 per cent, almost double the amount by which incomes are growing. This power....
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- Spring '11