‘income as reflected in the value of production or personal eco. omic income which the firms pay to the household in exchange for a factor cone fributions. Although one can be trang formed to another in the circular flog However, thischapter simply treats them as equal in order to emphasize he feantial features of income determina. tion. This is assuming that households are the only factor contributors and per- taal savings is the only leakage from the system, i.., no circular flow leakage butions. In addition, (NDis also equal to G: Basic ‘Concepts of Consumption Consumption is the act of using Soods and services to satisfy humas Wants. Ina broad sense, consumption is pot the monopoly of households since businesses and government also axe Soods and services to attain some ends, Household consumption directly satisfies human wants; whereas busi, Bess consumption does indirectly inas. uch as business activities provide the households with economic income es fone eonsumption needs. In addition, fovernment consumption expenditures are direct sources of personal satisfac. tion as periodic payments for society's current consumption of social goods, For example, the From the foregoing broad concept of consumption, this chapter narrove down to personal (household) consump- tion. In focus is expenditures on current fonsumption (eg. food). This is in con. trast to expenditures on”eapital goods are gradually consumed ‘and repeatedly used over a long perind