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Economic Impact of Increased Consumer Expenditure

Question

Discuss whether or not an economy will benefit from an increase in consumer expenditure.

Category:

Macroeconomic Factors and Policies

Preview Answer

STEPS TO WRITE ESSAY 💡MAIN POINTS💡OVERVIEW

I. Introduction
A. Definition of consumer expenditure
B. Importance of consumer expenditure in the economy
C. Purpose of the essay

II. Benefits of an increase in consumer expenditure
A. Increase in aggregate demand
B. Economic growth
C. Reduction in cyclical unemployment
D. Increase in tax revenue
E. Elimination/reduction of deflation
F. Increase in inflation to the inflation target rate

III. Drawbacks of an increase in consumer expenditure
A. Demand-pull inflation
B. Increase in spending on imports
C. Diversion of exports to the home market
D. Deficit on the current account of the balance of payments
E. Reduction in long-run economic growth
F. Increase in consumption of demerit goods

IV. Analysis of the table
A. Comparison of benefits and drawbacks
B. Evaluation of the impact of an increase in consumer expenditure on the economy

V. Conclusion
A. Summary of the benefits and drawbacks of an increase in consumer expenditure
B. Final verdict on whether or not an economy will benefit from an increase in consumer expenditure
C. Implications for policy-making and economic management.

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