Consumers in a Market Economy 1 111 Consumer Spending and the Economy
Consumer demand is important for a fourth reason. Consumers
buy the largest share of all the goods and services that the nation's economy produces. Suppose that we add up all the spending done by each business firm in the United States. Then we combine this
amount with the spending done by every town, village, city, state, and even the federal government. We will still find that the total is less than the spending done by American consumers. This fact is
shown in Figure 7.1.

As you examine the illustration of total spending in the United
States, you will see how important consumer spending is to the nation's economy. Almost 66 percent of all the money spent for the goods and services purchased in the United States in year 2005
were spent by consumers. This fact ties in with what we have said about the importance of consumer sovereignty, the influence of consumer spending on prices, and the impact of this spending on business and employment. Yes indeed, the consumer is a very important person in the U. S. economic system.