“Economic Studies Assignment Help, It is assumed that consumers are the most important players in the business environment. Make the case for or against this claim using examples and theory to support your answer”
Economic studies are of great significance in a number of aspects. The primary component of consideration in this way is the consumer of the economic resources. They deserve as a considerable component because they buy houses, vehicles, investments and spend their life in the country within which their routine life is influenced by economi
c decisions. There is a need to research, the underlying economics of interest rates, mechanics of demand/supply strategies, market fluctuations, and other economic factors during the course of their lifetime. Keeping in view the economic factors, consumer spending, and savings, the consumers are the most important contributors of a business environment. A number of theories and illustrations have been presented by multiple scholars, economists and journalists (eNotes, 2015).
Talking about a broad economic view, a local economy is a combination of individual, corporations and governmental spending/investment. Consumers serve as a significant contributing factor to economies. In accordance with Henry Hazlitt i.e. author of “Economics in One Lesson,” the consumer accounts for almost 70% of the national economy. In this regard, the consumer spending is of remarkable consideration. In an economy, where there exists free market economy, there is major reliance on demand of consumers to evaluate the assigning and division of resources. Consumer spending is one of the key factors in economics as it correlates with the entire consumer confidence in an economy. Higher the consumer confidence, higher will be the spending by the consumers in the overall consumer market. Consumer confidence, in general, serves corporations and Governmental departments as an analyzing element while considering the consumer behavior. Regarding the economy of United States, the consumer confidence is computed by way of a complete survey of 5,000 individual households. Other economies in this way, conduct other analyses to ascertain the consumer behavior and take appropriate steps to boost the economy. (Small Business – Chronometer, 2015)
There exists a need to understand the literature review on a growth of consumption. Consumer behavior stands for the portion of an economic population (Lury, 2011). All of the individuals are consumers. The way the activities are performed while the consumer obtains, consume and dispose of products and services (Blythe, 2008)). In this regard, there exist cultural diversity in an economy as the behavior of individuals is different in terms of exports, consumption, and savings(Bode, 2008). With respect to consumption, investment, and savings, Mullen and Johnson provide the handy demonstration of recent theory of psychological, as it lights primary matters pertaining to the psychology of consumers(Mullen and Johnson, 1990). In order to get aware of the connection between consumer spending and the economic growth, there should be the proper understanding of the process of growth in an economy. The general definition of the word growth is the increment of economic potential in order of production of goods and services. As the investment grows, the productivity margin of the economy enhances. Investing activity demands a decline in consumer spending in order to avail adequate amount of money for investments.
A consumer retains significance in any business environment of an economy. The main contributor in this regard is the consumer spending which proceeds to economic development. There exist a direct link between the consumer spending and the economy. The idea is consistent with the growth in an economy. Growth in economic expressions is defined as the addition to the potential of the economy in terms of production of goods and services. Multiple factors either in isolation or in combination contribute to give a boost to the economic growth. All these factors should be included in first preference by any business of the economy.
Assume an illustration here that a consumer buys goods or services from a company like KFC. Where the consumer pays money to buy a single unit of a zinger burger, the consumer pays the defined amount to the company. The associated factors in this way pertaining to the importance of consumer are the satisfaction the consumer obtains, the probability of consumers next arrival to the company, the quality of services provided and the amount by which the sales of KFC is influenced. Therefore, in case all of the said factors are in line and responding positively, the business will grow and expand by a certain percentage. This consumer spending in isolation is a very consideration to the company as the business gets plus points and increments when the number of consumers is increased. This growth at macro level adds to the total GDP of a country. One of the main components of GDP is the consumer spending which in aggregate drives the total consumer spending which is generally spent on goods and services produced in the country. This figure of GDP reveals the total consumer spending on goods in services as produced by the businesses in the economy.
Regarding the importance of the consumer in the environment with reference to current affairs and statistics, there are a number of stats and figures which support the condition statement of the research. As the consumer spending is a core part of GDP of an economy, although a slight participation as compared to investment, transforming it into entire growth and also indicated that consumer spending has an obvious influence on a healthy economy instead of the possibility of one. Keeping in mind the aforesaid discussions, some predictions can be made from currently available data. A current poll conducted by Harris Poll comprising of 2000 individuals indicated the results that consumers have the strong confidence with respect to the economy and more spending. In the upcoming semiannual period, individuals are anticipated to make expenditures in dining and entertainment activities. However, savings are expected be declined by a significant margin at all. With regards to the pool conducted, around 26% of the participants does not hold an alternative savings account and an age band gap reveal how money is to be spent. Around 64% of Millennials plan on investments and more savings while 38% of generation termed as Y convey that their spending will be more in the case of personal expenditures. Moreover, data extracted from U.S. Bureau of Economic Analysis i.e. BEA shows an increment in level of personal income and a decline in savings with regards to recent prior years. Taking the information from the initial quarter of the year 2012 up to the first quarter of 2014, the figures of personal income have been increased from $13,549 billion to $14,410 billion i.e. an increase of 6%. Disposable income revealed an increment of 5% from the prior period of research as the incomes have been jumped from $12,086 billion to a figure of $12,712 billion. It was noted that the consumer spending has been climbed by 5% i.e. from a figure of $10,373 billion to $10,859 billion respectively.(Ronnasi, 2014)
The statistic further revealed that the GDP for the year 2012 i.e. $15,534 billion to $16,800 billion in 2014 resulting in an increase if around 8%. As per the directives of International Monetary funds, the GDP is expected to be declined by 0.8% for the current year(Ronnasi, 2014). As the spending is increased by the consumer and the GDP slides, certain factors in this regard support the statement that the consumer spending is the main contributor to the economy. Although correlation is not deemed to be equivalent to causatives, an economic prediction can be availed by taking into consideration the capital investment for the period. Therefore there is a need to invest in strategies boosting consumer spending which in return will prosper the economy. Researchers and studies should be carried out with aim of strengthening consumer confidence (Ronnasi, 2014). The consumer pertinent topics comprise of spending, investments and savings. In the first ten volumes of the Journal of Consumer Research reveals a considerable misbalance in courtesy of researchers pertaining to self-reports on individual consumers. A new role for psychological economics is the expansion of consumer research in economics (Trudel and J. Argo, 2013).
Further, the Consumer research should be directed towards lab experiments and surveys. In this manner, a strong uniform mix can be availed among economics, psychological economics, and psychological researchers of the spending, investments and savings preferences of consumers (Acrwebsite.org, 2015). Regarding the history of economics, multiple economists take into consideration the part of consumers in the overall flow of goods and services of the economy. There exist a vital function of consumer that is being played and cannot be ignored in the economic and business environment. The reason behind the statement is that the results are in favor of the consumers as well as other contributing members of the society. The aforesaid statistics, researchers and journal references support the idea of boosting the consumer confidence to push to the consumer spending which in turn will output in economic development. Therefore, in this way, the role of the consumer in the society and business environment should be encouraged and improved in order to utilize the overall returns (Ncsu.edu, 2015).