What is the meaning of the term ‘Wealth Effect’?

The ‘Wealth Effect’ is when consumers feel wealthier (e.g. due to an increase in the value of assets such as housing) and therefore feel more confident and spend more. Often resulting in a rise in Consumer Expenditure and therefore GDP

Emily D. avatar
Answered by Emily D. Economics tutor

2065 Views

See similar Economics A Level tutors
Cookie Preferences