IB Economics HL 3.2.1 Aggregate Demand Questions

Study the extract below and answer the questions that follow.
Swiss current account surplus grows

(1) Switzerland recorded a current account surplus of 11 % of gross domestic product (GDP) in 2012. This was an increase from 9 % of GDP the year before.

(2) According to Switzerland's central bank, the Swiss National Bank (SNB), which released its balance of payments figures recently, this increase in the current account surplus was caused mainly by an increase in investment income, which nearly doubled to CHF40 billion.

(3) In terms of trade in goods and services, a surplus of CHF57 billion was recorded, compared with CHF59 billion in 2011. The decline was due to the fact that there was a 3 % increase in expenditure on imports of goods and services, but only a 2 % increase in the revenues from exports of goods and services.

(4) The Swiss financial account saw a net capital outflow of CHF97 billion - nearly three times the 2011 figure. This occurred after the SNB purchased large amounts of foreign exchange in an attempt to keep the Swiss franc from appreciating to damaging levels. The high level of the Swiss franc was a result of financial investors seeking safety in the Swiss franc, when severe problems in the eurozone created fears about the value and safety of the euro.

(5) The Swiss economy outperformed the eurozone in early 2013 as GDP in the eurozone shrank for a sixth straight quarter. This was largely caused by contracting economies in France, Italy, the Netherlands and Spain. The eurozone is now stuck in its longest recession on record.

(6) The Swiss economy performed better than expected in the first quarter of 2013, with GDP growth rising to 0.6 % as a result of strong levels of consumption, particularly in health and housing. and http://futurecurrencyforecast.com, 31 July 2013]

Define the term consumption indicated in bold in the text (paragraph 6 ).