What are personal consumption expenditures?
Credit:Monty RakusenCulturaGetty Images
Q:

What are personal consumption expenditures?

A:

Quick Answer

Personal consumption expenditures refer to the measure of price changes in consumer goods and services. Personal consumer expenditures consist of the imputed and actual expenditures of families; this data is the basis for forecasting inflation. The calculation also consists of information pertaining to services, durables and non-durables. In essence, the personal consumption expenditure model is an all-inclusive measure of goods and services consumed by individuals and families.

 Know More

Full Answer

The personal consumption expenditure calculation is similar to consumer price index. In fact, both measurable are a part of the personal income report put out by the Department of Commerce. Although similar in a number of respects, the Consumer Price Index and the personal consumption expenditure calculation share several key differences. For instance, personal consumption expenditures utilize a chain index, which evaluates consumers’ altering consumption habits as a result of price fluctuation, whereas the CPI utilizes a fixed basket of goods with weightings that do not fluctuate over time.

Personal consumption expenditures are somewhat predictable and have little to no impact on the domestic markets. The calculation serves more as a benchmark to better understand the level of consumption within the GDP. Additionally, personal consumption expenditure models, along with the CPI, are effective at measuring inflation.

Learn more about Financial Planning

Related Questions

  • Q:

    What are examples of capital goods?

    A:

    Some examples of capital goods, which are assets used to produce consumer goods and services, are machine tools, buildings, computers, baggage-handling systems, oil rigs and battleships. In the United States, the capital-goods sector is represented by companies such as Boeing, Caterpillar and Lockheed-Martin. Capital goods, such as conveyor belts, are used to produce consumer goods, such as candy bars.

    Full Answer >
    Filed Under:
  • Q:

    What products does Singapore export?

    A:

    Singapore primarily exports chemicals, machinery, equipment, mineral fuels, pharmaceuticals, consumer goods and services. Among the machinery and equipment that Singapore exports are electronics, laboratory and scientific instruments, aircraft and parts, medical devices, telecommunication equipment and computer software, hardware and peripherals. The country mainly exports services, such as maintenance and repair, business management and transportation services.

    Full Answer >
    Filed Under:
  • Q:

    What is the difference between consumer goods and industrial goods?

    A:

    The difference between industrial goods and consumer goods is that industrial goods are those necessary to produce consumer goods and services. Industrial goods are the tools and materials necessary to manufacture a good or provide a service to an end consumer, although they are also often used in the production of other industrial goods. Consumer goods are the end products of industry for the personal use of consumers, rather than the production of any further commercial goods.

    Full Answer >
    Filed Under:
  • Q:

    What are advantages and disadvantages of price discrimination?

    A:

    Advantages of price discrimination include higher revenue, which in turn lets companies offering products invest in more research and development, ultimately improving their services, while disadvantages include limited consumer surplus and higher prices for many consumers.

    Price discrimination refers to a pricing and retail tactic where companies charge consumers different prices for the same products depending on regional economic circumstances. This discrimination occurs in many settings, including electrical companies charging different rates for on-peak and off-peak hours and organizations offering discounted tickets for students and seniors.

    Full Answer >
    Filed Under:

Explore