Consumer spending affects the economy, even a slight reduction could damage the economy.
Consumer spending is the amount of money spent by individuals and houses on the final goods or services for personal use in an economy. This includes all types of goods whether durable or non-durable goods.
When the spending is reduced by the final consumer, it would result in the following:
- The demand for goods decreases
- Businesses to go bankrupt
- Workers laid off
- Taxes to reduce
The government would then have to rely on the following:
Ultimately, the growth of the economy would slow down. And if this continues then the economy would contract.
Learn more on consumer spending here: https://brainly.com/question/14071211
