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Edexcel A-Level Economics AS 2.3.2 2a Influences on Consumption Disposable Income Interest Rates Consumer Confidence Questions

Practise Edexcel IAL Economics 2.3.2.1d by linking house-price changes to wealth, confidence, consumption, aggregate demand and real output.

Syllabus
First assessment 2019
Course
Economics YEC11
Level
AS

Exam points

  • explain negative wealth effects when falling house prices reduce existing homeowners perceived wealth
  • explain how house-price changes affect consumer confidence and consumption through wealth effects
  • link house-price changes to aggregate demand, real output and the price level

Edexcel A-Level Economics AS 2.3.2 2a Influences on Consumption Disposable Income Interest Rates Consumer Confidence Questions question 1

[Maximum number: 4]

In the first quarter of 2019 average house prices decreased by 15% in real terms in Sydney, Australia.

Explain one possible impact of this change in house prices on the level of consumption.

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