Non-income determinants of consumption
Factors, other than income, that affect consumption are…
1. Wealth : When people have more wealth or feel wealthier, they tend to consume more.
So, as wealth increases, consumption curve shifts upward
By contrast, as wealth decreases, consumption curve shifts downward.
In this case, we can say that the level of wealth and consumption have a positive relationship.
Can you think of a real-life example
of this wealth effect?