the economy pertains to the income, expenditures, and resources that affect the cost of
running a business and household.
a. macroeconomic conditions
companies monitor the economy in terms of whether it is inflationary or
recessionary. in addition, a key concern is the confidence consumers have in the
present and future state of the economy. confidence indexes typically track
consumer expenditures quite well .
b. consumer income
a consumer’s ability to buy is related to income, which consists of three
1. gross income. gross income is the total amount of money made in one year
by a person, household or family unit.
2. disposable income. disposable income is the money a consumer has left
after paying taxes to use for such necessities as food, shelter, clothing and
transportation. people have decreased their allocation for personal savings
and are spending much of the money on new categories of necessities such
as vitamins, bodywashes, lotions, and etc.
3. discretionary income. discretionary income, the money that remains after
paying for taxes and necessities. discretionary income is used for luxuries.