Households
| English | Chinese | Pinyin |
|---|---|---|
| income | 收入 | shōu rù |
| borrowing | 借贷 | jiè dài |
| saving | 储蓄 | chǔ xù |
| consumption | 消费 | xiāo fèi |
| interest rates | 利率 | lì lǜ |
| confidence | 信心 | xìn xīn |
| mortgage | 抵押贷款 | dǐ yā dài kuǎn |
Where your money goes
- Every month a household gets income 收入, then splits it three ways: spend it, save it, or pay off borrowing 借贷.
- How families make that split shapes the whole economy.
Economics case lab
Classify real examples by the economic idea they show.
Saving is best defined as:
Saving is the part of income not consumed.
Household spending on goods and services is also called ______.
Consumption is the economic term for household spending.
Spending, saving 储蓄, borrowing
- Spending (consumption 消费) rises with income, but usually by less than income rises.
- Saving is income not spent; borrowing lets you spend more than current income.
Households split their income between spending, saving and borrowing
A rise in interest rates is likely to:
Higher rates reward saving and make borrowing dearer.
If households become pessimistic about the future, they are likely to:
Fear raises precautionary saving.
What affects spending and saving
- Income: richer households save a larger share.
- Interest rates 利率: high rates reward saving and discourage borrowing.
- Confidence 信心: optimism raises spending; fear raises saving.
A household can spend, save or pay tax with its income
Low-income households tend to spend a larger proportion of their income than high-income households.
They have little left over to save.
Different households behave differently
- Low-income households spend almost all they earn (little left to save).
- High-income households save a larger proportion.
Worked example. When interest rates rise, mortgage 抵押贷款 repayments cost more, so households cut back spending and try to save — one way the central bank cools an economy.
You've got it
- households spend, save, or repay borrowing out of income
- spending rises with income, but saving rises faster at high incomes
- interest rates and confidence shift the balance between spending and saving