USA HISTORY

Detailed explanation-1: -Underconsumption is the purchase of goods and services at levels that fall below the available supply.

Detailed explanation-2: -Underconsumption is a theory in economics that recessions and stagnation arise from an inadequate consumer demand, relative to the amount produced. In other words, there is a problem of overproduction and overinvestment during a demand crisis.

Detailed explanation-3: -: consumption of less than is produced that is caused by insufficient purchasing power and is a cause of business depression.

Detailed explanation-4: -The real problem when goods lie on the shelves is that no-one can afford to buy the commodities; in other words “over-production” should really be called “under-consumption”. In another sense however, the term “overproduction” is valid; but it is not goods and services which have been over-produced, but capital.

Detailed explanation-5: -According to underconsumption theories, such deficient consumption leads either to goods being able to be sold only at below-normal rates of profit, or to goods not being able to be sold at all. These effects are seen as leading in turn to cutbacks in production and increases in unemployment.