3.
4 Spending, saving and borrowing 
(alternative or extension exercises)
Activity 3.17: Shop ’til they
167
drop (30 minutes)
●● The charts present data on a number of long-
term consumer and market trends observed in
different countries or globally. Students should
make judgements on whether or not the trends
are likely to continue, giving reasoned
explanations for their views.
●● Question 4 draws attention to the fact that the
data will be useful for firms and governments
planning the future allocation of their resources,
while question 5 asks students to compare the
international data with trends observed in their
own country, providing reasoned arguments for
similarities or any differences they observe.
Activity 3.18: ‘If I owe you a
175
pound, I have a problem;
but if I owe you a million, the problem
is yours’ (40 minutes)
●● The article will test students’ skills of application,
analysis and evaluation. It describes rising personal
debt levels in South Korea, motives and concerns.
●● Question 4 lists a number of different types of
household and asks students to suggest how
their spending, saving and borrowing patterns
may differ and why. It therefore requires
students use their knowledge to generalize
relationships between different consumer
characteristics and spending, saving and
borrowing behaviours.
●● Questions 3 and 5 extend the analysis to the
relationship between consumer spending and
economic growth and how a government can
use monetary policy in an attempt to control
borrowing levels.
Discussion: Economics in
170
action (20 minutes)
●● The impact of changes in prices on money as a
store of value, consumer purchasing power and
spending decisions can be explored through
© Brian Titley 2012: this may be reproduced for class use solely for the purchaser’s institute
discussion of the article ‘Deflation in Japan’,
which can also be linked with Unit 6.1 (Price
inflation). It also reinforces critical economic
relationships between consumer confidence and
spending, and consumer demand and the level
of economic activity in an economy.
●● Students may be surprised at first that falling prices
could result in falling consumer demand given
their study of how markets work in Unit 2.2.
However, they will recall how falling consumer
demand will result in falling market prices.
Therefore, if a deflation is prolonged, or malign,
then prices will continue to fall and consumers
will continue to defer their spending, resulting in a
downward spiral. This will continue even when
interest rates are cut to zero, thereby reducing the
incentive to save. Despite this cut in the cost of
borrowing, there is still no incentive to borrow to
spend when prices are falling and, as a result, the
real value of any debt will also be rising.
Worksheet 8 (30 minutes)
Students can revise and reinforce their learning by
completing the worksheet in class if there is enough
time or as homework.
Coursework suggestion
●● Students can use government statistical
publications to investigate and document trends
and changes in total consumer spending and
spending patterns in a national economy of their
choice. They should report on what have been
the main drivers behind these changes and
evaluate what impact they have had on the
allocation of resources in the economy.
●● For example, charts can be complied from relevant
data and used to show how, after a period of
booming consumer spending during the last
decade, many economies experienced a deep and
prolonged economic recession, during which
employment and consumer confidence, incomes
and spending, all fell.