What term describes the expenditure made by households on goods and services like entertainment and food?

The term that describes the expenditure made by households on goods and services, such as entertainment and food, is consumption. This concept refers to the total value of all goods and services consumed by households and is a critical component of economic activity.

Consumption is a primary driver of demand in an economy and is essential for economic growth. When households spend money on goods and services, it stimulates production, which can lead to job creation and increased economic output. Understanding consumption helps analyze how consumer behavior affects overall economic performance.

Investment, in contrast, refers to spending on capital goods that will be used for future production, while expenditure is a broader term that can include all types of spending, including government expenditure and investments. Savings represent the portion of income not spent on consumption. Therefore, consumption specifically captures the daily financial activities of households in relation to their purchases of goods and services.