Sign Up Now
Get instant access to over 1 million+ study documents
OR
Already registered? click here to login
By creating your account, you agree to our terms of service, privacy policy and student honor code.
Increasing consumption taxes and capital gains taxes on investments also encourages savings rather than spending. State sales taxes are the most notable form of consumption taxes, although the federal government does have a few types of consumption taxes, such as taxes on gasoline (Ehrbar 2009). However, the government is often loath to increase the gasoline tax, given the negative impact this can have upon commerce and consumer prices. Decreasing income taxes will not necessarily encouraging savings, as consumers will have less money to both save and spend but by making consumption more expensive, savings becomes more attractive.
Lowered interest rates had a powerful effect in stimulating consumer spending behavior, and higher interest rates are perhaps the best way to encourage savings although higher or lower interest rates can be impervious to some psychological and social forces, such as the general desire to spend money over the holidays or fears of future job loss: This year, compared with the severe recession of 2008, total retail holiday sales are expected to rise 1.6% but after adjusting for inflation, the increase will be relatively...
Consumer's fears about losing their jobs outweigh available incentives to spend more money at lower interest rates (Debit card Christmas, 2009). Reductions in available credit are also another factor, as banks are also shy of extending credit to high-risk consumers despite the Fed's monetary policy (Silva 2009). Some fears and recent memories cannot be overcome with government policies.
References
Ehrbar, Al. Consumption tax. Concise Encyclopedia of Economics. Retrieved November 25,
2009 at http://www.econlib.org/library/Enc/ConsumptionTax.html
A debit card Christmas. (2009, November). Economics Week, 165. Retrieved November 25,
2009, from ABI/INFORM Global. (Document ID: 1903084411)
Federal open market committee. (2009). Federal Reserve Bank. Retrieved November 25, 2009 at http://www.federalreserve.gov/monetarypolicy/fomc.htm
There are two other things to consider. The first is that Fed policy can be assumed to be built into the markets. Prices in liquid markets are based on the best possible public information. Therefore, if I know about the pending change in the interest rates, that is public knowledge and will already be priced into the market rates. Any speculation I may have about interest rate changes is
Money Supply The Federal Reserve can control the money supply through open market operations, changing the required reserve rate, the percentage of deposits that banks must maintain on reserve as cash deposits at the Federal Reserve banks, and by changing the discount rate, the rate of interest at which the Fed lends money to banks (Federal Reserve System). This paper describes how these tools can be used during times of too
This is especially likely given the fact that prices are increasing faster than wages and faster than interest rates. There is little incentive to save, as inflation erodes the value of savings at current savings account interest rates. Instead, consumers are motivated to put their money to better use, which for them means purchasing the goods that they want and taking advantage of a newly-soft housing market in order
This economic indicator can be used to determine inequality within a given region or area. It can also be view the capacity for individuals within a particular nation to consume b. Rate of Value- $41,560 c. Source of Information- "Per Capita Personal Income U.S. And All States." Per Capita Personal Income U.S. And All States. Bureau of Business & Economic Research, 12 Oct. 12. Web. 02 Feb. 2013. d. Date of information-
Savings and Income Decline as People Increase the Saving Habit Saving refers to the income not spent by the consumer. In other words, savings are the money left when the consumer expenditures are subtracted from the disposable incomes that an individual earns over a given period. (Credo, 2006). When analyzing private and public savings, the savings refer to the sum of the public and private saving. (Credo, 2015). While private
Outsourcing Case Study: Saving Money at the Magazine through Process and Supplier Selection Every business must contend with the decision of how many of its necessary processes and the products and materials utilized in these processes will be internally sourced and accomplished, and which processes and procurements will be outsourced to other companies (Monczka et al. 2008; Trent 2007). This magazine operation is no different, and with the sudden reduction