Essay: Aggregate Consumption Of Consumer Goods

Sample Essay

Due to the decreased income as a result of current unemployment, the aggregate consumption of the consumer goods has drastically fallen. This has a further effect of increasing unemployment since the firms have to reduce their production to adjust to diminished demand leading to loss of jobs.The financial market has also been adversely affected to an extent that some brokerage firms such as Bear Stearns have collapsed. The fact that some homebuyers have accumulated mortgage loans greater than the value of the houses they hold has caused many of these buyers to default loan payment.  Most of the investment banks are currently trying to improve on their portfolios and have greatly reduced their credits to customers as a result. This decline in credit market will further decrease the consumer spending to a great extent.

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