Question

Explain how economic forces influences the choices you make as a consumer.

Answer 1

Some of the economic forces that influence the choice of customers are:

1. Employment and wages: Higher the wage and employment rate, greater would be the purchasing power of the people, leading to more demand for goods and services.

2. Prices and interest rates: High price implies high inflation rates which reduces the purchasing capacity of individuals. This creates a negative shock on the demand for goods and services. Interest rate also affects the demand decisions. Many high-end goods like cars, etc. are bought on credit. High interest rate implies, higher cost of borrowing and hence lower demand.

3. Consumer confidence: When people are abot thee overall economic condition of the economy and their personal financial future,they demand more.