![]() ![]() The economic term ‘consumption’ means the amount spent on consumption at a given level of income. Aggregate consumption depends on consumption function or propensity to consume. However, in generalizing the consumption behaviour of the whole economy, we have to draw some useful conclusions from the study of the behaviour of a normal consumer, which may be valid for all consumers’ behaviour of the economy. In the Keynesian theory, we are concerned not with the consumption of an individual consumer but with the sum total of consumption spending by all the individuals. Medical Insurance Relief paid to Insurance Companies.Propensity to consume is also called consumption function.Rent allowance paid to private landlords.Medical services supplied by GP’s to households covered by the GP card or medical card.Free travel, electricity, telephone rental.Higher Education Grants, Scholarships, etc.The other significant Market Production Purchased by General Government include: In Government Accounts and Sector Accounts, the government's drug payment is included in Government FCE and excluded from Household FCE. The Drug Payment Scheme spending is included in Personal Consumption Expenditure and excluded from Net Expenditure of Central and Local Government. For the NIE and QNA it is considered that the State provides the money to the households and the household pays the pharmacy. The Government payment is Market Production Purchased by General Government for Households. In practice, the household pays the amount up to the threshold, and the government pays the rest directly to the pharmacy. For example, under the Drugs Payment Scheme, the government pays some of the costs of medicines bought in the pharmacy if a household spends more than a certain threshold in a month. ![]() The difference in presentation depends on whether "Market Production Purchased by General Government for Households’ Direct Use" is considered Government spending or Household Spending. The Government part and the Household part are slightly different in the NIE and QNA. In the Institutional Sector Accounts and Government Accounts it is called Final Consumption Expenditure of Households and Final Consumption Expenditure of Government. In the Annual National Accounts (ANA) and Quarterly National Accounts (QNA) it is called Personal Consumption Expenditure and Net Expenditure of Central and Local Government. Other kinds of tax, like taxes on income, which have to be paid whether the income is spent or not, are not FCE.įinal Consumption Expenditure is part of Gross Domestic Product as calculated by the Expenditure Method. Paying back a loan is reducing financial liabilities and payment of interest on loans is part of Investment income and not Final Consumption Expenditure.įinal Consumption Expenditure includes the VAT and other taxes on products that the consumer must pay. It also excludes other investment, like company shares, bank deposits, and pension contributions which are Financial Assets. Intermediate Consumption Expenditure is different: it is used up in producing other goods and services.įinal Consumption Expenditure excludes Fixed Capital Investment which is used to buy fixed assets that are used in producing other goods. Corporations do not have Final Consumption Expenditure because they do not directly satisfy human needs and wants. Non-Profit Institutions Serving Households (NPISH) also have Final Consumption Expenditure to provide goods and services directly to households.įinal Consumption Expenditure is all spending on directly satisfying human needs and wants. This includes the cost of running schools, hospitals, prisons, the Gardaí, the Army, social housing and the rest of public services. Final Consumption Expenditure (FCE) of Households is money spent on food, electricity bills, phone bills, rent, bus fares, fridges, and so on to satisfy the household’s needs and wants.įinal Consumption Expenditure of Government is government spending on providing services and goods directly for the country.
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