Chapter 19.4 The Economy and You

Consumer Rights and Responsibilities  Consumers have rights and responsibilities in our free enterprise system.  Consumerism is a movement to educate buyers about the purchases they make and to demand better and safer products from manufacturers.

continued  Many laws protect consumer rights. The Fair Packaging and Labeling Act requires every package to have a label identifying its contents and how much it weighs. The Pure Food and Drug Act requires manufacturers of foods, cosmetics and drugs to prove their products are safe.

continued  The Better Business Bureau is one of many groups formed to protect consumers. Businesspeople run the local bureaus. They provide information about local businesses, warn of dishonest practices and investigate consumer complaints  Pres. JFK and later Nixon, emphasized five rights known as the Consumer Bill of Rights. Consumers have the right to a safe product, to be informed, to choose, to be heard and to redress.

continued  With consumer rights come responsibilities. If a product or service is faulty, you are responsible for starting the problem-solving process. State the problem and suggest a fair solution. Keep an accurate record of your efforts to solve the problem. If necessary, contact the manufacturer in writing and keep a copy.

continued  A warranty is a promise made by a manufacturer or seller to repair or replace a product within a certain time if it is faulty.  Consumers are also responsible for exhibiting ethical behavior by respecting the rights of producers and sellers.

Your Role as a Consumer  Disposable income is money a person has left after all the taxes on it have been paid. People generally use it first to buy necessities, such as food and housing. Discretionary income is money left over after paying for necessities that can be used for satisfying wants, including luxury items and savings accounts.

continued  Virtually all the steps in the consumer decision- making process involve an opportunity cost. Consumers must decide if a purchase is worth the next best option they would have to give up.  Consider your goals when you make a buying decision. Buying things now will make long-term financial goals harder to accomplish.  Saving is setting aside income for use later. It is the part of your income that you don’t spend.

continued  Saving enables people to make major purchases, such as a car or a house. Saving also comes in handy in emergencies.  Saving by individuals benefits the economy as a whole. Saving provides money for others to invest or spend. Saving also allows businesses to expand.

continued  To save regularly, workers can have their employers withhold a fixed amount from their paychecks and deposit it automatically into their saving accounts. Or, people may do it themselves by saving a specific amount each week or month.  Interest is the payment people receive when they lend money, or allow someone else to use their money. Money saved in a bank earns interest as long as the funds are in your account.

continued  Saving is a trade-off. You decide to spend less today to increase your ability to spend in the future.  To decide how much to save, you need a plan. Your plan would consider your everyday expenses, reasons for saving, interest you could earn and your potential to earn a higher income in the future.