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In 2008, the debt of Canadian households rose much faster than their wealth as stock markets corrected and the housing market slowed down. During the first quarter of the year, overall household debt rose by about 3 percent, while personal disposable income rose by 2 percent (Financial Post Magazine, August 19, 2008).

a. Explain why the growth of household wealth slowed in Canada.

b. When a household buys shares (stocks), does that represent consumption, saving, or investment? Explain.

c. When a household buys a new house, does that represent consumption, saving, or investment? Explain.

d. What factors may influence a household when deciding between buying stocks, bonds, or a house?

Microeconomics, Economics

  • Category:- Microeconomics
  • Reference No.:- M9747325

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