Confidence — Households | IGCSE Economics

Exam Frequency Analysis

Past paper frequency (2018 to 2024)

This topic accounts for approximately 4% of your exam marks.

new

Rare

New4%

New emphasis in the 2027 syllabus; influences on households' spending, saving and borrowing, including age and culture, are examined directly. Guidance based on specimen materials.

Confidence is how optimistic households feel about their own and the economy's future, especially their job security and expected income.

When confidence is high, households expect secure jobs and rising incomes, so they spend more and borrow more to buy big items, and feel less need to keep a savings safety net.
When confidence is low, for example during a recession or when unemployment is rising, households fear losing income, so they cut spending, save more as a precaution and avoid taking on new debt.

A lack of trust in financial institutions can also reduce saving, because people may not be willing to put money into savings accounts.