What is the meaning of the term ‘Wealth Effect’?
The ‘Wealth Effect’ is when consumers feel wealthier (e.g. due to an increase in the value of assets such as housing) and therefore feel more confident and spend more. Often resulting in a rise in Consumer Expenditure and therefore GDP
ED
Related Economics A Level answers
All answers ▸What is inflation and how does it come from supply or demand side?
Explain why a rise in investment should help to increase the rate of growth of the Uk economy. (9 marks)
What is a key constraint to economic growth and development for developing countries? Explain how so.
Explain the use of interest rates in the economy.