Some Definitions
Consumption (C), or personal consumption expenditures, is the market value of purchases of goods and services by persons and nonprofit institutions and the value of food, clothing, housing, and financial services received by them as income in kind.
Consumption spending is divided between consumer durable goods (cars, refrigerators, jewelry), consumer nondurable goods (candy, gasoline), and consumer services (car mechanic, dentist). As a rule of thumb, a good is considered “durable” if it lasts 3 or more years.
think it through: Is your house or apartment a consumer durable good? It would seem so but, no, housing is not classed as consumption of any kind. Instead, it is considered as part of the economy’s capital stock. As is ...
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