Economic Trend Influencing the Budget

Friends Economic Trend
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Friends Economic Trend
Economic Trend Influencing the Budget
One of the economic trends that are influencing my friends' budget is the customer confidence index. The consumer confidence index indicates the degree of confidence consumers have in the economy's overall state and income stability (Campelo et al., 2020). It suggests future consumption and savings of households based on their expected financial situation, economic situation, saving capabilities, and unemployment. From my friends' expenditure, the considerable spending such as housing and food increases from $8800 to $9700 and $4200 to $4600 respectively while savings reduces by half from $1500 to $750. In addition, some expenditure on personal spending and entertainment was decreased by $150 and $400 respectively while other spending remained unchanged due to consumers' confidence.
Relevance of scarcity, trade-off, or opportunity cost on the friends' budget
If resources are scarce, consumers are forced to make choices with an opportunity cost that is the cost of foregone best alternative (Shah et al., 2015). Since the wages are scarce, my friend has to decide how to spend more on housing and food and trade-off some spending on personal spending, entertainment, and savings formalized by the opportunity cost concept. It shows the relevance of scarcity, trade, or opportunity cost on my friends' budgets.
Relevance of supply and demand on wages, rent, and food cost
The amount of wages earned relates to how it is spent where higher wages increase purchasing power, and low wages reduce purchasing power. The prices of food and rent increase if the demand is high and reduces if the demand is low. My friends' cost of rent and food increased by $900 and $400, respectively, implying an increase in demand (Shah et al., 2015).
Relevance Of Compound Growth on Friends' Budget
Compound growth measures the growth rate of an...