Question

Why is consumption important to economic activity?

• A. Consumption is inevitable
• B. It is a part of the process
• C. It indicates the standard of living of people
• D. None of the above

Answer 1

Answer: (C)

It indicates the standard of living of people

Consumption is the end point of production process. The quality and quantity of consumption has impact on the standard of living of people in a society. If the society produces more than it consumes, it can keep the residual portion for investment so that economy continues to grow.