Question

Since 1960, the percent of disposable income that Americans spend on food has declined to about 10% from approximately 17%.    That change represents a significant increase in the “affordability” of food since it now represents a much smaller portion of spending. List and explain two reasons why the true impact on American food purchasing is even more significant than the decline in percent spent on food indicates.

Answer 1

Introduction:-

The United States is the pioneer of technological innovation across the world. It has seen rapid development of manpower, capital and overall growth because of the same. The country is widely recognized as one of the most modern ones in which industrialization is rampant and the quality and standards of living of the society are very different from developing or underdeveloped economies respectively.

It is truly indicative that the American purchasing of food has largely reduced from 17& of their income to about 10% as stated. One of the key reasons has been that the standard of living of most people has made it a negligible expense respectively.

Case Specifics:-

The aim of the case study, is to look at alternative reasons why the decline in % of money spent is. The following are two major reasons respectively which have kept prices of the products same while ensuring that people earn more relatively.

Since prices have not seen a large fluctuation due to the reasons listed people in the country spend significantly lesser than others respectively.

• Increase in Supply Backed By Technological innovation

The reason for Americans spending significantly lesser is that the supply side has been seeing a rapid increase both domestically and internationally due to which while income have increased the actual prices have remained unchanged since total supply has increased many folds respectively.

This means that expenses remain same, and income increases which translates into lesser % of spending respectively.

• Higher Value of the $ and options of imports

It is a known fact, that the dollar is priced higher than most other conventional currencies respectively. This would mean, that whenever needed the country can get supplies without having to worry too much about costs involved due to the appreciated value of dollar which is the commonly used exchange medium respectively.

Conclusion

Thus one of the key reasons for the % decline in average spending of Americans is that the prices of food have remained unchanged or have increased at rates which are negligible when compared to the economy, the residents and their average increase in salaries respectively.

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