Definition of Wealth effect:
Changes in aggregate demand caused by change in the value of assets such as stocks, bonds, gold, property. Increase in the market value of these assets induces a feeling of being richer in their owners (even if no additional cash is realized) and often tends to encourage spending and to dampen savings.
The tendency of a person to spend increasing amounts of money as a result of his or her increase in personal wealth or perception that the economy at large is thriving.
How to use Wealth effect in a sentence?
- The wealth effect was something that everyone liked because the feeling of being rich is something very addictive and fun.
- You should try to figure out how the wealth effect may impact your product and come up with strategies to adjust.
- Sometimes there will be a change and you will need to figure out how the wealth effect will impact the marketplace.
Meaning of Wealth effect & Wealth effect Definition