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How prices influence consumption in conduction mechanism

Zhao Shu-hua

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Abstract

Insufficient consumption is one of the most important factors which restrains economy growth. To expand consumption is an efficient way that can promote economic development. Income and price are the two main factors influencing consumption. In the present situation of our lower price level, the factors affecting price are always neglected. We can gain another transmission system of insufficient consumption through the way of statistics analysis on the price's factors influencing consumption. It is different from income. The transmission system is fixed capital investment↑→the quantity of enterprise's loan↑→enterprise's cost↑→price↑→purchase power↓→consumption↓→stagnation of economy growth. So we should cut down the fixed capital investment, reduce price and stimulate consumption in order to promote economy growth.

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What this paper is about

Insufficient consumption is one of the most important factors which restrains economy growth. To expand consumption is an efficient way that can promote economic development. Income and price are the two main factors influencing consumption. In the present situation of our lower price level, the factors affecting price are always neglected. We can gain another transmission system of insufficient consumption through the way of statistics analysis on the price's factors influencing consumption. It is different from income. The transmission system is fixed capital investment↑→the quantity of enterprise's loan↑→enterprise's cost↑→price↑→purchase power↓→consumption↓→stagnation of economy growth. So we should cut down the fixed capital investment, reduce price and stimulate consumption in order to promote economy growth.

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Available abstract

Insufficient consumption is one of the most important factors which restrains economy growth. To expand consumption is an efficient way that can promote economic development. Income and price are the two main factors influencing consumption. In the present situation of our lower price level, the factors affecting price are always neglected. We can gain another transmission system of insufficient consumption through the way of statistics analysis on the price's factors influencing consumption. It is different from income. The transmission system is fixed capital investment↑→the quantity of enterprise's loan↑→enterprise's cost↑→price↑→purchase power↓→consumption↓→stagnation of economy growth. So we should cut down the fixed capital investment, reduce price and stimulate consumption in order to promote economy growth.

Key concepts: Consumption (sociology), Economics, Autonomous consumption, Investment (military), Order (exchange), Gross fixed capital formation, Monetary economics, Microeconomics

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