spending,+saving+and+borrowing;

Spending, saving and borrowing

Clearly all of these are related. An individual faced with what to do with their income can either spend it or save it. So: Consumption+Savings= Income Consumers can spend more than their income if they borrow money.

Savings Group work (2 or 3 persons) Now look at the following and decide for yourself which of these individuals will spend or save the most. Explain your answers:

Tim: Tim is at University and lives of his parents, student grants and loans from the bank. He has a total income of $6,000 dollars per year. He is presently in his last year of an Economics degree and he has been recruited by "LoadsofEuros" merchant bank as a foreign exchange dealer, with a starting salary next year of $100,000 dollars. Tim is single and has no dependents. Interest rates are 5% at present.

John: John is Tim's Dad. He too works in the city and also has a high salary of $110,000 per year. John's wife is a stay at home mum who has brought up 4 children of whom Tim is the oldest. All the other children are in their teens. John is 57 and hopes to retire at 60 to enjoy his hobby of golf.

Jayne: Jayne is a single mum who works the night-shift at McDonalds. She is only able to do this thanks to her own mother who lives with Jayne and looks after her granddaughter, when Jayne is working. Jane is on minimum wage of 5$ an hour and works 40 hours a week.

Now watch the video below. Listen carefully. Why are the Chinese saving so much? (In China you may need "help" watching this) media type="youtube" key="BV1rYHBH3b0" height="315" width="420"

Finally read and make notes from P 188-190.

Consumption

What income do you have and what do you spend your money on. List your typical spending this year. What percentage of your income do you spend on these? <span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 16px;">How do you think this may be different from your parents spending patterns? <span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 16px;">Interview your partner and find out the similarities and differences between your spending patterns <span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 16px;">Homework: Interview your parents tonight and find out the proportion of their income that they consume and save. What do they spend their money on? (hint: we don't need to know specifics, just group them into the following areas: Rent; food; clothing; entertainment; electronics; holidays; etc )

<span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 16px;">Now read p182-187 and make notes: <span style="font-family: 'Trebuchet MS',Helvetica,sans-serif; font-size: 16px;">Assessment: Exercise 1 P 185 and exercise 2 P187 ( this is part of your formal assessment grade this year so make it good!)