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UNIT 2: Topic 6 (6.1 Making spending decisions (6.1.2 Buy now and pay…
UNIT 2: Topic 6
6.1 Making spending decisions
You must decide whether to spend now or save until you have the money
6.1.2 Buy now and pay later
This is when you receive a product/service before paying for it.
This can be done using a credit card, a personal loan or store credit (usually for higher value items).
6.1.3 Unexpected spending
It is impossible to predict all outflows all the time, for example you may have replace a flat tyre.
It is important to have spare money to over these costs, or a credit card an also be used
6.1.4 Emergency funds
This should be around 3 to 6 month essential expenditure
The best place for this is in a instant access savings acount
6.2 The impact on consumer spending on society
6.2.1 Increased spending
Higher levels of employment
Higher personal income
Reduced government borrowing
The more money government has coming in means the more it spends on infratructure
Problems in the economy can cause
Unemployment to increase
Employers to freeze employees pay or award very small pay rises
More people to save rather than spend
6.2.2 Reduced spending
This can cause big problems. The demand will fall meaning companies make less profit meaning the government get less taxes. It will also have to pay more out in benefits. To improve they can
Increase borrowing, but this could lead to bigger problems
reduce spending, which could lead to further unemployment cut backs
Raise taxes
Or use a combination of all three
6.2.3 An ideal world
A healthy economy requires people to spend and save