La macroeconomía It is a theory that studies the global indicators of the economy; among them, private consumption and public consumption. Both are essential to understand the economy of a country, know its forms of investment and shape the total spending of the nation. But what exactly is private consumption? How is it different from public-type consumption? All the answers you need, below.
What is the main objective of private consumption?
The concept of private consumption refers to the expenses made by families, individuals, companies and organizations in an indeterminate period of time. The objective of private spending is to satisfy individual consumption needs with the goods and services offered by the market.
What does private consumption measure?
Private spending measures the total value of goods and services that both households and private institutions acquire within their corresponding activities, regardless of their economic sector. Of course, it is important to bear in mind that private consumption only measures final goods, and not those that have been used for the production of other goods and services.
As we have already anticipated, the type of consumption that predominates in a country will be the one determined by its economy. With greater private consumption, we will be talking about a capitalist country in which the law of supply and demand, así como la privatization of companies or economic activities. However, with more public consumption, we will find ourselves facing an interventionist economy (that is, when the State acquires a decisive position in regulating the economy of a country).