0455
Households
Microeconomic Decision Makers · 1 question type
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.
Income is the strongest single influence on all three decisions.
- Spending. As income rises, total spending rises, because households can afford more goods and services. But the proportion of income spent tends to fall as income grows: a low-income household spends almost everything on necessities, while a high-income household can spend a smaller share and still cover its needs.
- . As income rises, the proportion saved tends to rise, because once necessities are covered there is more income left over to set aside.
- . Low-income households may need to borrow to afford necessities; if income falls, a household may have to spend a higher proportion of that income just to get by, leaving less to save and sometimes forcing it to borrow.