Kochkonbaev Ernazar MУБ 1-19

3.11

1) How are the richer people able to spend more and save more than those who are
poorer?

When you have money, you spend less on the stuff that ensures you survive the
day and more on the stuff that ensures that you (and your children, and your
possessions, and your estate) survive and thrive for many years. Poverty is a chaos
that screams in the present tense, and the anxiety of having no money forces poorer
families to direct their attention to immediate concerns. As a result, the poor spend
relatively more on what will keep them alive, because they must. And the rich
spend more on what will keep them rich, because they can.

2) Why are poorer people more likely to borrow than richer people?

I think the hard part is defining “rich.” I am sure that middle-class people borrow
more money than poor people. They buy more things, have more credit. A poor
person might borrow $3000 to buy a car from “buy here/pay here” car lot. A
middle class person might borrow $60,000 from a bank to buy an SUV. Most
middle class people that I know, which would be most of my friends, are carrying a
considerable debt. They all have mortgages instead of paying rent. That puts them
hundreds of thousands of dollars in debt that a poor person doesn’t have.

As for the poor people, They just wanted enough money to pay all the bills and lay
a little aside for a rainy day. That was and is one of the saddest things I ever heard.

3) Why is rising consumption associated with rapid industrialisation of coutries?

Industrialization – the period of transformation from an agricultural economy to

an urban, mass-producing economy – has accompanied every period of
sustained per capita gross domestic product (GDP) growth in recorded history.
Less than 20% of the world's population live in industrialized nations, yet they
account for more than 70% of world output. The transition from agrarian to
industrial society is not always smooth, but it is a necessary step to escape the
abject poverty found in less-developed countries (LDCs).
A positive attitude to work, combined with the desire to use new technologies and scientific
discoveries as quickly as possible, also contribute to the accelerated growth of production and
incomes. As a result, an ever wider, ultimately, global market for products and services of all
kinds is formed, which in turn stimulates investment and further economic growth.