The importance of consumption

Consumers, after paying the statutory deductions of tax and national insurance are left with their disposable income, which may be further reduced if they enter into pension and mortgage commitments.

In general, high percentage of income is spent with individuals/families with low incomes, than those on higher incomes. People on higher incomes can save a larger proportion of their income, because basic living expenses are not so costly. 

Things that change level of consumption:---

1. The Wealth Effect - consumers spend more when they feel wealthier, i.e. if value…