Consumption, << kuhn SUHMP shuhn, >> in economics, is the use of goods and services to satisfy needs and desires. Most business activity is aimed at providing goods and services for consumption. Examples of consumption include eating food, wearing clothing, and using soap. People who use goods and services are consumers.
The value of goods and services that a family consumes depends almost entirely on its income and wealth. Families with low incomes tend to spend a larger part of their earnings for essentials such as food and housing than do families with higher incomes. Those with the lowest incomes spend more than they earn and are forced into debt. As incomes rise, families tend to spend a larger part of their earnings for such items as clothing, education, and entertainment. John Maynard Keynes, a noted British economist, was one of the first to emphasize that the general level of consumption in an economy helps determine the general level of income (see Keynes, John Maynard).
