What Is A Literature Review

What Is A Literature Review?

This post involves looking at the concept of a literature review in its entirety. A scholarly evaluation of journals and other sources of information in the name of literature is important in the process of research. The main objective is to find ways in which literature review broadens the knowledge of a researcher in his field of interest. The essay will also look at types of literature reviews, characteristics of good quality reviews, steps in conducting a review process, how to write a good review, the functions in research and why they are important in any study. Essentially at the end of this paper, there would be substantial evidence to support the reasons as to why a literature review is a staple element in most research papers in school and outside the confines of an educational institution.

A literature review is fundamental in the writing of a research paper for both students and researchers. It essentially involves going through available research and published work on a particular topic and giving an outline or synopsis after analyzing it (Rider University). Its intent is to answer questions posed by the researcher on the topic of interest. Moreover, allows the researcher to offer criticism and detect loopholes in research providing potential ideas for future research (Rewhorn, 2018).  Therefore, literature review connects the dots of previous research to current research and provides a foundation or reference for future research. Literature review has been said to be of significance in expanding knowledge attained by researchers and students on a topic (Rewhorn, 2018). In academic writing students are able to build critic, analysis and argumentative skills that are useful in future careers in research. This paper will look at ways and role in which literature review plays in broadening knowledge in the field of research.

Literature can be sourced from either the internet, books or peer reviewed journals. Books are said to be an advantage in literature review because they are of superior quality and information is comprehensive and integrated into one. The only downside to this source of information is out-of-date research that might not be relevant in current research. This can be attributed to the fact that books take a long time to publish (Woodley, 2018). Library catalogues are extremely helpful when it comes to reviewing literature in books. Having an average of 15 books is a good starting point as well as checking the references to each book.

Journals are important coz they provide the most current research. Even though it takes three years before a particular research is published, it is still more up-to-date than research found in books. It is pertinent to look for and store hardcopies of these journals (Woodley, 2018). Electronic databases are useful for softcopies. It is important to photocopy or summarize articles of interests as you skim through the latest issues. Looking through journal abstracts, citations and indices can make search results better. Due to immense technological advancement, the internet has become such a necessary tool in research. It is the fastest way to gain access to both books and journal articles for literature review. With the ease of using search engines it has fast becoming the most used tool for getting information. Using platforms such as Google one can easily search for published research using key words.

When beginning this process, researchers usually analyze research from journals of interest and peers in the discipline of study. These previous works usually highlight the main topic points focused on and enable one to provide an overview of the topic. Areas of contention or argument in published work provide platforms for more discussion (Mudavanhu, 2017). Generally, a good literature review sheds more light on available research through a critical summary. Bolderston (2008) reports that there are different types of classifications of literature review. A systematic review is one that analyzes studies that collect secondary data using organized methods. They then provide a comprehensive summary of the available research in a thesis (Bolderston, 2008). A narrative or traditional review uses critically chosen material collect and evaluate information that can be used to answer current and relevant questions or develop new ones. Systematic and narrative literature reviews differ in the way both reviews search and synthesize information; narrative literature review is more susceptible to bias than the former. A scoping review is a less rigid systematic review in that they are similar in every way except a scoping review is less selecting on research used. However, a scoping review requires a little more structure to eliminate any inconsistencies or gaps in search results (Bolderston, 2008).

Steps in Conducting Literature Review

There are four known courses of action involved in the literature review process. Firstly, one needs search through available sources of information; books, journals and the internet. This process should be meticulously conducted because the relevancy and authenticity of the research has a great impact on the research paper (Mudavanhu, 2017). Before embarking on this process, a researcher needs to have posed the research problem and questions hoping to be partially addressed by existing literature. Secondly, one needs to assess the available literature; first beginning with the broad scope and eventually narrowing it down. Further critical inspection is done in this stage to select what is applicable and relevant to a researcher’s problem question. In this stage, one can also establish the theoretical framework for the study. The central theme of the paper offers a clear guideline on what research work is relevant and which is not.

There are various factors one should consider as they inspect various forms of literature. The literature informing the theoretical framework should be valid and factual (Rocco & Plakhotnik, 2009). A researcher should also consider the methodologies, theories and concepts posited by other researchers through their work. Moreover, one has to determine how to transfer the findings of these studies to their current scope of study. Additionally, it is important to note varying arguments from researchers’ work and be able to give a concrete reasoning behind these differences. The next stage in conducting literature review is to develop a theoretical framework. The process of developing a theoretical framework involves identifying relevant theories in your topic of interest.

Being able to weave out unnecessary information to create the main theme and concepts is also very important in the process. Factors that affect the process of literature review will impact the process of theoretical framework (Rocco & Plakhotnik, 2009). The theoretical framework has a dependent complex relationship with the process of literature review; both process affect and depend on the other. Finally, the last step in this process is developing a conceptual framework. The foundation of the research problem is the conceptual framework. The difference between theoretical framework and conceptual framework is the former focuses on theories and themes that explain the research while the latter discusses elements of theoretical framework and centers attention on them in the study (Taylor, 2010). In a nutshell, the conceptual framework focuses on narrowing the research problem and is contained under the wing of the theoretical framework.

Writing a Good Literature Review

Over the years, literature reviews have become a significant staple in scientific publications. Pautasso (2013) posits that there are ten rules to writing a good literature review in research. One has to first out a lot of thought and consideration into the topic of interest. A well-defined and important topic makes it easier to spend considerable time finding relevant research on it without it being tiresome. One can decide on the topic of interest through posing questions that they want the research to answer (Pautasso, 2013). The article goes on to stress that finding a topic is not enough, one has to find their target audience for the research. Secondly, scoping and delving into relevant literature is important. Whatever research papers you use, one has to record them so as to replicate them in the future. One should take a systemized and organized approach in this process to ensure they can trace back any paper, document or file needed (Pautasso, 2013). Even when there are literature reviews available on a particular topic of interest, there is always a different new angle to analyze research. The clear guidelines to a good review are for a researcher to be exhaustive and expansive in his reading.

When conducting literature review, the third step would be note taking (Pautasso, 2013).  As human beings are susceptible to errors and short memories it is of utmost importance to jot down short notes while looking into various sources of literature. Essentially it is so that one can write down anything of interest and come up with a draft of the review that will have to be revised to produce the final output. The rough draft does not have to be coherent but should be referenced and paraphrased where applicable. With changing times, there are different requirements in the writing of research papers. Some journals require a short require while others a lengthy one. Identifying what is required of you and how to deliver will be the next step in the process (Pautasso, 2013). The purpose of a mini-review is to catch the attention of people who do not have a lot of time in their hands. The problem with this review is that there is a danger of leaving out some important information and material. A full review allows for length exploitation of material and coverage but can be bypassed by busy individuals with no time.

Dissertation Literature Review
Dissertation Literature Review

Pautasso (2013) also posits that after writing down notes, one might be called upon to decide whether to write a descriptive or integrative review. A descriptive literature review will center on what methods were used to collect data, findings and the analysis and discussions of each study while an integrative review attempts to find similar findings and concepts from the material reviewed (Pautasso, 2013). The article further states that the decision on what type of literature review to be use; systematic versus narrative, integrative versus descriptive and mini versus full depends on the publishing journal requirements, available time for writing the review, number of authors in the paper as well as the available research on the chosen topic.

There is a delicate balance to achieve in making of a good literature review. The review should be able to attract a target audience from related areas of interest but also maintain specificity to the topic (Pautasso, 2013). A review that is too broad might end up losing its readers and too narrow might close off potential interested readers. It might be especially problematic for an interdisciplinary review that is aimed to integrate two areas of study. Researchers may need to focus on topics that surround the two disciplines to ensure none of them feels left out. Pautasso (2013) notes that making a summary of literature is not all what it takes to write a good review. An expository evaluative analysis of the methodologies is key as well as the ability to point out discontinuities in the research that begs for more future research (Pautasso, 2013). A literature review should highlight significant headways and accomplishments in the area of study, showcase questions that stem from relevant research and reveal major areas of contention. To make sure that a review includes the three factors, a researcher might have to partner with other peers who have different abilities and talents to make varying contributions for the overall success of the review.

Apart from being consistent, a good review must have a good structure (Pautasso, 2013). It generally includes an introduction, the main ideas and a conclusion. The structure needs to provide a consistent flow for the reader. Systematic reviews might differ in a small way because they require that the researcher include search results, key words used and even the source or data base (Pautasso, 2013). Before literature reviews are published in journals a researcher can incorporate peer reviewers to provide objective feedback that should be taken into account. Varying accounts of feedback shed more light on the topic being researched on. This will greatly improve the draft review. One is also required to re-read and correct any form of errors in the review to improve the quality.

To improve an understanding in the topic and eliminate bias, a researcher should also conduct their research separately before embarking on extensive literature review. Some published work might contain bias from either the researcher being too harsh on themselves or too easy (Pautasso, 2013). Publications these days are required to contain literature reviews that contain recent and up-to-date research so that they do not become obsolete before being released themselves. However, this does not mean that research work published a long time back should be completely sidelined. Since a literature review should not point out gaps in research that have been addressed in recent research, a researcher needs to keep abreast for new developments and publications in journals to avoid that complication (Pautasso, 2013). Although a researcher can outrightly state the period of review coverage, the publication process still takes a long time. After publication, new literature review will be published and a researcher might be required to update their review (Pautasso, 2013).

Scholars use literature reviews by rearranging important information in a specific way depending on how they plan to tackle a research problem to make a contribution in a specific field of study. Scholars can give a new understanding of old research through a literature review. On behalf of readers, scholars can map out how far research into a topic has gone, what has been done and what is yet to be accomplished. Scholars can also use literature reviews to address readers’ questions and offer guidance on important and suitable research. They are also able to evaluate so many sources and identify solutions to the problem at hand.

Functions of a Literature Review

A literature review performs many functions. One key function is to highlight important and influential research in a field of interest. A leading piece of research is one that brings forth new concepts and information in a particular field (Gray & Malins, 2004). These new ideas revolutionize our scope of thinking and understanding prompting new research and approaches. Therefore a researcher can pick and choose what types of research to go in detail, what to mention and what to skip. Leading research is given prominence because of its heavy impact in a specific field. As literature review involves a skimming process to determine what literature is relevant to a particular study and which is not a researching can be able to compare different concepts and arguments from reviewed literature (Mattern, 2010). There are usually different arguments posed in different papers and the literature review explores a wide range of them to form a conclusive well-represented summary. Getting a full understanding of all concepts pertinent to a topic enables one to also understand the research topic in general.

Harris (1985) posits that a literature review also purposes to show the evolution of ideas from history to current research trends. It essentially helps to present data chronologically to give more clarity of thought. Aside from offering a historical perspective, a literature review also serves to give an overview of new developing knowledge in a field. There is constant publication of new research and studies and a researcher needs to keep abreast of most of these new developments (Harris, 1985). Within reasonable capacity, a researcher should evaluate and summarize new research and try to see how the research problem fits into the whole grand scheme of things. Other disciplines might require a researcher to look into studies from other countries in other languages because researchers from non-English speaking countries have also made tremendous contribution in the field of research.

Gaps in research will always be identified when conducting literature review. Sometimes researchers may omit some material from studies because they are less appealing to the public or even the researchers themselves. Some research problems also do not attract as much funding as others and researchers may opt out of those studies. Some research topics make it difficult to collect data on. As much as new research may be developed to fill in gaps, sometimes well-structured and developed research can be done on existing research areas. It is evident to see that research undertaking has many drivers and that consequently determines what gaps are left in the publications.

Literature review can be used point out new emerging trends in research. The objective of the study enables a research to find new developments in research. A researcher would need to start from a wider scope of study before narrowing it down in order to look for new trends in that field of interest. One major function of a literature review is to summarize the main ideas in a particular topic of study. When writing a literature review, the researcher may impose their subjective opinions on the ideas presented from reviewed literature; causing bias. Before beginning the summary process, it is important to check credibility of the sources as well as writers. A scholar needs to have developed critical analytical skills to assess key ideas that fit into his work of study from relevant material. A research is also able to create a new idea or merge existing concepts during the evaluation process.

Importance of Literature Reviews

Firstly, the literature review serves to clearly define a research problem. As much as a research question is what directs and structures literature review, it works from the opposite direction as well. What a researcher learns from evaluating different literature one learns a lot of things. A scholar will find out what has been studied, gaps in the available literature and further suggestions for research. All these information goes in to shape the research problem further. It enables provide a clear direction of the research. Highlighting the gaps in areas of study focuses a researcher and enables them to gain greater perception and comprehension of the material.

When one goes through various literature and research, they are equipped with tools of conducting research. One is further educated on different methodologies of conducting research. A researcher will be in a position to compare and contrast methods that have been used and what has been proposed to ensure a smoother and efficient process. By comparing and contrasting, one can weigh the pros and cons to different procedures and pick the most effective methodology. Sometimes methodologies picked fail to address the research problem and that is where literature review can help. It allows one to justify what procedure they have used in their research.

Literature review also serves to broaden knowledge of a researcher in their field of study. As one reads extensively and broadly they encounter a lot of what other researchers have written and published. A literature review serves to familiarize one with most knowledge that has been disseminated and questions raised from a particular research problem. Conducting research for an advanced degree calls into question a researcher’s knowledge and expertise. Therefore, a literature review will serve to meet this requirement. Additionally, a literature review will enable a researcher to figure what their contribution is to the current knowledge. After conducting your study, getting finds and interpreting those findings, a literature review aids one in making comparisons between findings to make a conclusion. In essence it facilitates contextualization of findings within the existing body of knowledge.

A literature review can help a researcher seem confident and well-prepared to the target audience. It is a clear indication that one has done a lot of reading and fact-finding before embarking on tackling the research problem (Smith, 2012). Therefore, the audience easily trusts one’s results, conclusions and recommendations. Finding a lot of credible and leading research as well as posing good arguments shows one level of expertise and knowledge in their field of study which can come in handy especially for PhD students who are hoping to have their dissertations accepted. A researcher therefore needs to critically discern and evaluate what articles to include in their literature review and what number. Also, one needs to stay close to the main theme as synthesize all the information available from the relevant sources.

It also follows that a good well-defined and researched literature review prevents a scholar or researcher from committing plagiarism (Smith, 2012). Research papers need to produce a creative and original idea in their specific fields of study. Repetitions are not tolerated. Each new published work needs to contribute something different or broaden knowledge in a particular topic. Unless there is need to repeat some research, ones credibility might be in question if such a scenario occurred. Because most research are dependent on funds and time, a researcher needs due diligence to avoid wasting such resources. In case one finds out at the literature review stage that their research problem was already addressed by previous research, then they can modify the topic and choose to address an original idea. In a way, it streamlines your research focus and makes clear the problem being addressed. The selection process in literature review is meticulous and rigorous and therefore one starts from with a broad focus and eventually narrows it down. Apart from showing the researcher’s competencies and preparedness throughout the entire literature review process, it shows the linkage between past, current and future research.

Literature Reviews and the Broadening of Knowledge

One of the main objectives of conducting a literature review is to broaden the knowledge of the researcher in his area of study. This happens in two ways; one through extensive reading of numerous sources to find ones pertinent to the research problem and two finding gaps in research and attempting to recommend future research to fill the research gaps.  A standard literature review is usually well-researched, synthesized, structured and of high quality containing credible authors. A research gap is a research problem or question left unaddressed by a particular study that begs for further clarification (Moeini, 2014). Having a research gap in your study does not discredit your competency because it shows originality at tackling problems in a particular field left to be tackled. Furthermore a research gap is indicative of great knowledge in that area of study and a well-carried out research (Moeini, 2014).

Sometimes identification of a gap can lead to the development of a research problem. Therefore it shows that identification of a research gap builds ones knowledge as a researcher is required to have a deep set of understanding in the field for that to occur (Fink, 2005). Gap finding leads to categorization of researchers in the field. There are types of researchers when it comes to this area of research. First class researchers are those that are well skilled and knowledgeable in their respective fields. Attaining this particular class takes a lot of time and experience and knowledge (Moeini, 2014). The second class researchers mostly get recommendations from professors in school and therefore do not necessarily invest time and effort into finding a research problem. The third group is the third class which is mostly influenced by the environment when it comes to choosing a research topic (Moeini, 2014).

Finding a research topic or gap therefore calls one to actively and extensively read broadly on material related to their interest. A researcher will go through countless sources and even sometimes read other systematic literature reviews to gain understanding of what is required of him and find a clear direction for his research paper (Fink, 2005). Looking for trends and new research requires previous background knowledge in a particular discipline. Every new paper poses a different argument, theories, methodologies and themes fully equipping the researcher with a wide range of choices on what is applicable in his study. In this process, one is required to delve into citation reports and analysis of content further broadening their knowledge spectrum (Moeini, 2014). A new researcher in the field would widen their scope by looking at the research of more seasoned and experienced researchers in the field. These leading researchers are those who have made an important in the body of knowledge and have their research widely published and distributed. Through the literature review process, one can learn the tricks of conducting a good quality research paper and how to meaningfully make a lasting contribution as a researcher.

As new trends are constantly emerging and old ones shifting, a literature review broadens a researcher’s knowledge by always keeping them on their toes and ensuring they read extensively to avoid duplications. It is also evident that to conduct and formulate a good quality literature review one must go through a number of resources (Ridley, 2012). Simply reading and noting down relevant material to make a summary contributes profoundly to a researcher’s wealth of knowledge. Furthermore, discussions among peers that stem from the research process when looking for feedback or suggestions serves to illuminate on new concepts and ideas. When addressing contrasting arguments in different research papers on a particular topic, a researcher has to either form an opinion from their own wealth of knowledge or embark on further reading to draw conclusions; consequently one continues to build their knowledge in the area (Torracro, 2005). Any researcher needs critical thinking, analytical and organization skills that come in handy in the research process. The steps to conducting and formulating a literature review serve to build these skills in budding researchers who lack them.

When forming the theoretical and conceptual framework, a researcher has to critically analyze various theories before forming a conclusion (Torracro, 2005). One would require an in depth understanding of the origin of the theories and how they govern the relationships in the problem matter. A researcher would have to fully comprehend theories pertinent to the problem area and concepts that fall within the theory under the specific subject matter. This entire process further illuminates on more information in the field of interest for the researcher (Ridley, 2012).


A literature review is an important aspect in many research papers because of its many benefits and functions especially of importance is the function of broadening knowledge of a researcher in their field of interest. Apart from giving focus to the research problem, a well written literature review shows the deep understanding of the content being studied and researched on. There are various types of literature reviews. The selection of the appropriate one depends on factors like funding, publishing journal and time allocated for research. The process consists of going through various sources of information to pick relevant topic material, making notes to form a draft review, allowing feedback of the review and finally structuring it.

A good review bridges old knowledge with new one by identifying research gaps and areas that might prompt future research. It is a necessary part of a dissertation, thesis or any research paper because it shows the competencies of a researcher and enables a researcher to avoid any problems of duplication and plagiarism. It also develops critical thinking and analytical skills as they skills important to the process of research. This process of literature review is an ever ending process that seeks to offer a theoretical background to a study and help a researcher understand how their research will fit in the existing body of knowledge; their contribution. Adherence to a good structure and theme is importance in the overall process of literature review.


Cooper, Harris M., A Taxanomy of Literature Review, Annual Meeting of the American Educational Research Association (69th, Chicago, IL, March 31-April, 1985)

Taylor, D. (2010). The literature review: A few tips on conducting it.

Mattern, S. (2010). Literature Review Tips.

Bolderston, A. (2008). Writing an Effective Literature Review. Journal of Medical Imaging and Radiation Sciences, 86–92.

Moeini, S. (2014, September 12). 6 (very useful!) Approaches to identify research gaps and generate research questions.

Mudavanhu, Y. (2017). Quality of literature review and discussion of findings in selected papers on integration of ICT in teaching,role of mentors, and teaching science through science, technology, engineering, and mathematics (STEM). Academic Journals, 189-201.

Pautasso, M. (2013). Ten Simple Rules for Writing a Literature Review. PCBI, 1.

Plakhotnik, T. S. (2009). Literature Reviews, Conceptual Frameworks, and Theoretical Frameworks: Terms, Functions, and Distinctions. Sage Journals, 120-130.

Carole Gray and Julian Malins, Visualizing Research: A Guide to the Research Process in Art and Design (Burlington, VT: Ashgate, 2004). p. 43.

Rewhorn, S. (2017). Writing your successful literature review. Journal of Geography in Higher Education, 143-147.

Woodley, M. (2018, March 22). The Three Types of Sources.

Fink, A. (2005). Conduction Research Literature reviews: From Internet to Paper 2nd Edition. Thousand Oaks, California: Sage.

Ridley, D. (2012). A step by Step Guide for students 2nd Edition. Los Angeles: Sage.

Smith, N. (2012, January 17). Purpose of a Literature Review.

Torracro, R. (2005). “Writing Integrative Literature Reviews: Guidelines and Examples. Human Resource Development Review 4, 356-367.

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Consumer Purchasing Behaviour Social Media

The Impact of Social Media in Influencing Consumer Purchasing Behaviour: A Study of Clothing Retailers

Title: Consumer Purchasing Behaviour and Social Media Influence. The impact of social media on the purchasing behaviour is an area of interest that has gained much interest and study in the 21st century. This research focuses in the ways in which social media has had an effect on the purchasing behaviour and most of the interest in the clothing and retail industry. The first part of the research will take a look at the various ways in which the social media influence has impacted on the purchasing behaviour. The different stages of purchase will be analysed in the background study, both before purchase, during purchase and after purchase behaviour and the influence of the different forms of social media on the same.

The data collection method that has been used during this research is the analytical study design. The researcher distributed questionnaires to a study sampled population, which consisted of university students at London South Bank University since they are considered to be the most consumers of social media. The results that were obtained indicted that social media has a very big influence on both the three stages of the purchase process. The recommendation, review and consumer motivation among others are the motivating factors that make the use of social media have a big influence on the purchasing behaviour of consumers.

Consumer Purchasing Behaviour Dissertation
Consumer Purchasing Behaviour Dissertation

This research will therefore have a big influence on the marketing strategy that will be used by future clothe retailers. It also gives an insight on the influence of technology and social media to be specific on the purchase behaviour of the modernised internet users. Therefore, more research should be done by clothe retailers on the best way to promote their businesses through social media.

Dissertation objectives

  • To determine the role of social media in influencing the pre-purchase phase of the consumer purchasing Behaviour lifecycle
  • To determine the role of social media in influencing the purchase phase of the consumer purchasing Behaviour lifecycle
  • To determine the role of social media in influencing the post-purchase phase of the consumer purchasing Behaviour lifecycle

Dissertation Contents

1 – Introduction
Background of the study
Statement of research
Study objectives
General objective
Specific objectives
Research questions
Significance of the study
The scope of the study
The study limitations
Research structure

2 – Literature Review
Social media
Social media marketing
Consumer purchasing behaviour
The role of social media in influencing the pre-purchase phase
The role of social media in influencing the purchase phase
The role of social media in influencing the post-purchase phase

3 – Research Methodology
Research Design
Sampling Design
Sampling Frame
Sampling Technique
Data Collection Methods
Research procedures
Data Analysis Methods
Ethical Considerations

4 – Results and Findings
Description of the sample
Response Rate
Respondents’ gender
Social Media Sites
Time Spent on Social Media Sites
The role of social media on making purchase judgements
Frequency of Influence of Social media on purchase decisions in clothing Retail Industry
Social Media Influences on the Pre- purchase Stage Analysis in Clothing Retail Industry
Problem recognition
Information search
Evaluation of alternatives
Social Media Influence on the Purchase Stage Analysis in Clothing Retail Industry
Consumer Attitude in Purchase Stage
Consumer Motivation in Purchase Stage
Product Perception in Purchase Stage
Social Media Influence on the Post-Purchase Stage Analysis in Clothing Retail Industry
Satisfaction and Dissatisfaction
Product Performance

5 – Discussion, Conclusions and Recommendations
The role of social media in influencing consumer purchasing behaviour
Social media Influences on the Pre-purchase Stage
Social media Influences on the Purchase Stage
Social media Influences on the Post-Purchase Stage
The role of social media in influencing consumer purchasing behaviour in the clothing and retail industry
Social media Influences on the Pre-purchase Stage
Social media Influences on the purchase Stage
Social media Influences on the Post- Purchase Stage
Recommendations for further research



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Luxury Goods Consumer Purchasing Behaviour

Evolution in Consumer Experience and Purchasing Behaviour of Luxury Goods

Title: Consumer Experience and Purchasing Behaviour of Luxury Goods. This dissertation aims to determine whether behaviour changes in consumers have been affecting sales of luxury branded accessories over recent years. The research is significant to the luxury products particularly the sale of accessories within the fashion industry. The fashion and design industry stakeholders range from store-owners to merchandisers and business executives whose decisions reflect on the customer’s reactions and the behaviours toward product thus affecting sales of that particular product. The purpose of conducting this research is to find out whether the luxury products’ perception has depreciated over time due to impacts brought about by changes in customers’ behaviours. The research also aimed at determining whether luxury accessories have become readily available in the market and the impacts of the associated factors which make the brands less luxurious.

The consumer behaviour is basically affected by factors such as change in mode of communication, social networking, globalization, mass consumption, harmonization of the culture, e-tail, celebrity branding and the 2008 economic recession. The researcher has collected data from a wide range of literature such as academic sources and journals to help in finding out the main changes existing in consumers’ behaviour. These academic materials represent the theoretical section of this research. The research conducted involved carrying out interviews which were compiled per oral and written format. This were then sent to luxury retailers as a section of case study and later analyzed. The author finally managed to compare and contrast the obtained results on the theoretical analysis in parallel to the company case. The results were compared with a report conducted on luxury spending habits which have been published by the American Express representing part of this research discussion.

Luxury Goods Brands Dissertation
Luxury Goods Brands Dissertation

Dissertation objectives

  • To determine the consumer’s experience and purchase behaviour changes in the recent years within the luxury market
  • To find out whether the consumers’ behaviour changes phenomenon depreciates the luxury value of luxury brands
  • To find out whether the consumer experience and purchasing behaviour changes influenced consumption and consumerization of the luxury brands leading to the wider accessibility of luxury in the fashion industry

Dissertation Contents

1 – Introduction
Background of the study
The aim of the study
Objectives of the research
General objective
Specific objectives
Research questions
Research hypothesis
Research methodology
Expected outcomes
Problems and limitations
Theoretical framework

2 – Literature Review
Background information
The history and evaluation of luxury goods branding in high fashion
The key concepts
The relationship between the price and quality in the luxury market
Globalization and changes in the luxury goods market communication
Social networking
Mass consumption
The global marketplaces, global consumer culture and harmonization
Celebrity branding and endorsement
Celebrities as a reference group
Celebrities as style icons
From the point of view of a fashion luxury brand
From the point of view of the luxury goods market as a whole
Future of the luxury products and market after the recession

3 – Research Methodology
Research Design
Data Collection Methods
Compiling Interviews
Sampling Frame
Company Cases
Helsinki 10
Data Analysis

4 – Data Findings and Analysis

5 – Conclusion
Scope for Future



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Cognitive Psychology Research Project

Cognitive Psychology

This post includes an introduction, a body, and a conclusion. The introduction introduces the concept of cognitive psychology and how it influences the responses of individuals. It also gives out a detailed history of how cognitive psychology has evolved through the ages. The body has explained the components of cognitive functions. The study of these cognitive functions defines the whole concept of cognitive psychology. These functions include language, perception, memory, and attention. The body also explains the how the computer analogy compares with the processing procedure of information in the human brain. The succeeding section includes three paragraphs that elaborate the importance of cognitive psychology. Lastly, the last section contains two paragraphs that summarize the whole essay.


Unarguably, the scientific study of the human mental and cognitive functions has led to many discoveries and observations. Foremost, various psychologists and anatomists have tried to elaborate the human cognitive human processes. For instance, history elicits that Plato was among the first individuals, who tried to explain how the human mental processes function. Cognitive psychology entails the scholarly and practical study that tries to comprehend the manifestation of the various mental processes.

Indeed, the brain is a complex organ that operates in a complex manner to process and coordinates the various processes in our bodies. Thus, cognitive psychology tries to outline how the brain compartmentalizes functions such as memory, perception, language, reason making, and perception (Thorndyke, 1977). It is relevant to mention that this study emphasizes how mental processes affect the way humans act, operate or feel. Furthermore, it is crucial to add that cognitive psychology requires an understanding of cognitive science and the fundamental foundations of cognition.

As mentioned earlier, cognitive psychology utilizes various research and studies that elaborate the various mental processes. Thus, this study has links to the various branches of psychology. For instance, these concepts exist in the fields of personality, social, educational, and developmental psychology. Various concepts entail the functioning of the brain with regard to mental processes.

Plato came up with the notion that the brain is the foundation of the various cognitive processes. Various philosophers and psychologists have argued for or against this notion. History elicits that there were scholars, who argued that human thought was innate. This concept tried to show that human thought was not experiential. Alternatively, other philosophical debates tried to elaborate that human thought depended on the sensory situations.

In fact, philosophers such as John Locke extensively supported this idea. Crucially, comprehension of the various cognitive functions requires an understanding of the anatomy and functioning of the brain. Notably, the 18th century paved the way for this understanding. Broca’s area is an anatomical part of the temporal region of the brain associated with language development and production (Mandler & Johnson, 1977).

Paul Broca discovered that this anatomical area determined the nature of language production in humans. This discovery was very crucial, since, it strengthened the foundations of cognitive psychology. Consequently, Broca’s aphasia relates to the dysfunctional production of language. Carl Wernicke identified the region associated with the processing and understanding of language. Damage to the Wernicke’s area due to trauma, infections or congenital malformations causes Wernicke aphasia.

Fundamentally, various situations and occurrences in history increased the awareness of cognitive psychology. In fact, psychologists drew various concepts from the various occasions in history. For instance, the introduction of the computer technology induced various concepts concerning cognitive psychology. The understanding of how the artificial intelligence affects the computer performance was very crucial. It enabled psychologists to draw contrasts and comparisons between this process and how the mental functions operate. It is fundamental to note that computer experts such as Herbert Simon and Allen Newell cooperated with cognitive psychologists. These synergic efforts helped the evolution of cognitive psychology (Tversky, 1981). Significantly, the World War II led to various insights regarding the understanding of behaviorism. There was a general motivation for scientists, who wanted to increase the performance of soldiers.

Various individuals, such as Donald Broadbent developed concepts of behaviorism that provided more insight about the field of cognitive psychology. Indeed, human cognitive functions play various roles in the survival of human beings. Sensory input plays the role of information in the human’s brain. Thus, it has to go through various transformational and conversion stages so as to produce relevant interpretations. It is important to mention that cognitive psychology may have various distinctions or branches depending that improve the general comprehension of cognitive psychology.

Cognitive Psychology
Cognitive Psychology

The main distinction involves a classification of the various sources of information related to cognition. As mentioned earlier, mental processes and computer functionality have a couple of similarities. Therefore, the main branches include cognitive neuroscience, experimental psychology, and computer analogies approach. Using this classification, individuals may comprehend how mental cognitive functions operate.

Cognitive neuroscience involves how the brain functions when under various types of stress or duress. For example, cognitive dysfunction may occur due to trauma, congenital malformations, infections or brain tumors. Thus, an understanding of how these factors affect the general cognitive functions explain the scope of cognitive neuroscience. Human experimental psychology entails the study of the various mental activities and how they interrelate with the sensory input. The effect of various situations on language or memory may enhance the comprehension of human experimental psychology. Notably, computers receive data input and process it through various sequential procedures. Thus, there is a branch of cognitive psychology that dwells on the comparisons and contrasts between computer functionality and mental procedures. In summary, this paragraph provides more insight on how the various cognitive psychology concepts evolved.

Humans constantly receive data in the form of sensory input. The various sensory perceptions include the sense of sight, smell, taste, sound, and touch. Physiology explains how these senses coordinate the behavior and state of humans. Sensory input travels through nerves to the nervous system. The central nervous system includes the brain and the spinal cord. Thus, these organs have the capability of interpreting data and converting it into useful information. Significantly, the cerebral cortex plays a crucial role in converting the sensory input. For example, the occipital cortex processes visual stimuli (Siegler, 1976).

The body, consequently, utilizes the information to perform bodily functions that manifest as responses. The body may react to painful stimuli by moving that part of the body. Indeed, the fundamental areas of study in cognitive psychology involve mental functions that influence behavior. This essay shall elaborate the contents of the major mental processes. These include attention, perception, memory, language and metacognition. Foremost, attention affects the way humans behave and act.

There is no proper definition for this term. However, it defines the presence of alertness towards a certain sense of perception. Attention has two major branches. Psychologists categorize attention depending on the type of control type. Hence, attention may have exogenous or endogenous control. This distinction aids in elaborating the various ways in which attention operates. In fact, psychologists use various models to explain how the influence of attention on our behaviors and actions.

The endogenous type of attention originates from the brain, especially, from the cerebral cortex. In this model, the brain actively sends impulses that control the awareness of the sensory input from the external environment. For instance, an individual studying a section of a book elicits this type of attention. Alternatively, the exogenous kind of attention refers to awareness of sensory impulses from the peripheral regions of the body. Exogenous attention, often, manifests in our daily activities. The significance of attention is evident when the brain is receiving different kinds of stimuli from the environment.

The brain discriminates between the crucial and irrelevant kinds of sensory input. Thus, attention enables the brain to perform its cognitive functions effectively. It filters and picks out the important aspects of data. This effect helps the brain to concentrate on the various aspects of data in the environment.

Unarguably, many cognitive psychologists have studied the various aspects of divided attention. People are able to critically analyze and process diverse forms of sensory input. This phenomenon occurs due to divided attention. Thus, friends at a loud party can talk to each other and, concurrently, appreciate the decent music at the background. Researchers are still trying to figure how the brain picks attention and how it processes sensory input so as to produce information (Anderson, 1990). In summary, attention is crucial, since, it avoids the overload of data at the brain. Too much unfiltered information may lead to confusion and poor concentration.

Language is a fundamental aspect of cognitive function. Cognitive psychologists extensively research and conduct various experiments on this field of study. Language involves the use of phonetic and articulation sounds to communicate. This cognitive function affects the way individuals relate to each other. There are various disorders associated with the poor development of language. Dysarthria refers to the poor articulation of sounds in relation to talking or speech formation. Alternatively, dysphonia describes the inability to produce speech sounds.

Often, it manifests due to the impairment of the vocal organs which include the tongue, throat, mouth, and lips. This elaboration emphasizes on the relevance of language in the lives of humans. In fact, the main form of communication in humans is through the use of language. It acts as an auditory form of sensory input. Thus, language is not a communication tool in the auditory impaired individuals. As mentioned earlier, cognitive psychology involves the study of how cognitive functions influence the way humans behave. Language is a principle factor that affects the way humans act or behave.

The temporal region of the cerebral cortex takes part in the development, production and processing of language. The Broca area of the cerebral cortex plays the crucial role of language production. Paul Broca provided the insight about how the brain perceives input and produces language. He discovered that the cerebral cortex coordinated the audio output through at this area of the brain. Physiologists and psychologists refer to the dysfunction of language production as Broca aphasia.

Broca aphasia has various causes. However, the main cause of this type of aphasia occurs due to brain injury at the Broca’s area. On the other hand, the Wernicke area participates in the processing of language. It is relevant to mention that the human body perceives the various forms of sensory input and undergoes a sequential process to produce relevant information (Williams et.al, 1988). This information may be in the form of audio input. Physiologists and psychologists have extensively studied this area in a bid to understand how this area incorporates signals to produce output. Indeed, language is a vital aspect of human development. In fact, pediatricians concentrate on language development in infants because it may predict the cognitive function (Bruning et.al, 1999). Various factors influence the way people develop language. For example, memory and socioeconomic status are major determinants of language development.

Significantly, memory is a fundamental component of cognitive functions. There are two major distinctions of memory. Short term memory defines memory over a short period of time. Cognitive psychologists dedicate most of their research in studying the aspects of memory. Amnesia is a common symptom of patients, who have suffered from concussions. It refers to the lack of memory. Various factors may affect memory. Of course, individuals vary in the way they remember events, people or names. Thus, genetics affect memory. In fact, research shows that gene variations may influence the functioning of the cerebral cortex in terms of the formation of the neural circuits. Therefore, this effect may also elaborate the differences in learning rates. Amnesia occurs after concussions due to the traumatic injury of the head. Practitioners and psychologists use various ways to gauge the memory levels of various individuals.

For instance, a practitioner may ask a patient to tell him or her the name of the president as a mode of gauging the long-term memory. There are various concepts that cognitive psychologists utilize to elaborate the different instances of memory. For instance, the Ebbinghaus experiment involves the naming of a list of items. This experiment elicits that it is easier for people to recall items mentioned at the start or the end of a list. Nevertheless, some words in the list may attract more attention more than others. Long-term memory has various types. A common type of long-term memory is the semantic memory, which individuals use to identify popular things or names.

Cognitive psychologists extensively study on how the mental processes process and dedicate information. Thus, they utilize various approaches to studying the impact of these mental functions on behavior. A good example of a psychological approach is the reductionist approach. This approach refers to the ideology that regardless of the complexity of human behavior, filtering of cognitive functions is possible. Thus, it is important to emphasize the role of practical studies and applications on the study of cognitive psychology

Of course, scientific studies require practical applications and studies that prove the accuracy and legitimacy of the concepts (Rosch, 1975). Therefore, cognitive psychology also requires a laboratory utilized for testing the credibility of the various theories. Nevertheless, it is important to mention that some laboratory studies might lack the appropriate laboratory validity. Notably, this branch of psychology involves the extensive use of experimental methods. Cognitive psychology has theories that oppose some of the concepts of behaviorism and conditioning. It also antagonizes the concepts of the various psychoanalytical theories developed by famous psychologists such as Sigmund Freud.

Critical analysis of the various cognitive processes shows that the invention of the computers induced an elevating interest in the comprehension of the whole concept of thinking. Psychology scholars agree that the field of cognitive psychology gradually progressed during the 1960s. Famous psychologists such as Jean Piaget laid the foundation for the development of principles regarding cognitive thinking and reasoning. The artificial intelligence system of the computers resembles how the various mental functions.

Computer analogy provides a rough description regarding how the computer processes information. Consequently, cognitive psychologists link this process to the sequence of cognition. The paradigm of cognitive information starts with the perception of various stimuli from the environment. It is relevant to point out that there are various distinctions between behaviorism and cognitive psychology. Behaviorists always study the external manifestations of human behavior. Thus, they can only observe the body stimulus and response. Hence, they only study the input and output. Alternatively, cognitive psychologists believe that human behavior has an external and internal component. They, therefore, study the input and response. Also, they study how the internal processes coordinate to mediate the production of a response after stimuli perception. As mentioned earlier, these coordination processes may involve language, attention, and memory.

Significantly, perception is a vital determinant of humans’ behavior. It involves the ability to sense the external stimuli. Perception often occurs at the peripheral organs. They include the skin, eyes, ears, tongue, and nose. These organs have nerve endings that can receive stimuli from the external environment. Consequently, conversion of stimuli to nerve impulses takes place at these sites. Visual and auditory stimuli are some of the common stimuli. Cognitive psychology deals with how the central nervous system interprets these stimuli.

Perception is an example of a cognitive process that occurs constantly in normal humans. Comatose patients may have inadequate or impaired perception. Unarguably, the study of cognitive psychology involves a collection of various concepts from the various fields of study. Cognitive science and cognitive psychology share certain similarities. It is difficult to distinguish between these areas of study. Nevertheless, critical examination elicits various contrasts. Foremost, cognitive psychology involves the understanding of the motivating factors of human behavior. Thus, it seeks to explain why individuals act in different ways after exposure to the same kind of stimuli. Alternatively, cognitive science involves an accumulation of various concepts from diverse subjects of study, especially, neuroscience. It extensively depends on practical research and the utilization of case studies.

Importance of Cognitive Psychology

Notably, cognitive psychology plays a fundamental role in the various branches of medicine. The treatment of depression uses the concepts of cognitive therapy. Depression is steadily increasing in various regions. Essentially, many practitioners and medical experts use pharmacological therapy to manage depression. However, statistics show that only 60% of patients benefit from the use of antidepressants. Antidepressants have adverse side effects.

Many patients taking antidepressants experience weight gain. Moreover, there are various reports of patients experiencing hypersensitivity reactions due to the use of antidepressants. Thus, the management of depression should include the combination of pharmacological and non-pharmacological therapy. Non-pharmacological therapy, often, involves the use of cognitive therapy. In this treatment model, the patient teaches himself to control the depressive symptoms. Studies show that there is a gradual improvement of symptoms using this model. In fact, the use of antidepressants only is not a better alternative because patients lose the internal ability to control their moods.

Crucially, personality psychology has enhanced due to the general comprehension of the concepts of cognitive psychology. Evidently, individuals have diverse personality traits. Therefore, the various methods of perception and information processing influence the way people behave. In fact, studies show that some personality disorders may evolve due to cognitive dysfunction. Cognitive therapy is important in the management of personality and mental disorders. It involves training individuals to control their actions and behavior. Also, cognitive psychology has empowered educational psychology. Psychologists can now illustrate how humans handle and process information.

The various theories in the education sector utilize concepts from this branch of psychology. For instance, the various distinctions of long-term and short-term memory have provided more insight on how students learn. Furthermore, teachers can determine the causes of amnesia in a student using the memory model. Cognitive psychology has also increased the understanding of knowledge organization.

Jean Piaget developed various ideologies and theories regarding the cognitive development of humans from adulthood to childhood. His theories elaborated how individuals have diverse forms of behavior. In fact, he came up with a model that explained how skipping certain childhood stages may lead to the manifestation of certain abnormal behavior. Cognitive psychology played a crucial role in the development of his theories. In fact, it is crucial to add that the fundamental concepts of developmental psychology relate with those of cognitive psychology.

The cognitive development of a child extensively uses metacognition. Thus, the child focuses on its thoughts then it assumes that all other individuals also have thoughts and feelings. Metacognition is a cognition process that involves a critical analysis of one’s thoughts. It helps people to gauge their mental performance. Vitally, cognitive psychology aids in defining the various causes of social dysfunction. According to research, anti-social people have a depressed information processing function. They have a limited capability of processing the social stimuli. Also, they cannot evolve an appropriate social response or cue. There are various social models that trace the various stages of humans as they progress to adulthood.


An analysis of the essay shows that cognitive psychology plays a significant role in the development of human beings. It involves the study of how mental processes influence the behavior and deeds of individuals. It is worth noting that cognitive psychology examines how human beings perceive and process information. It deals with the internal processes that occur before the evolution of a response. As mentioned earlier, there are various cognitive processes that play a principal role in determining the behavior of people.

Attention, language, memory, and perception are the major examples of cognitive processes. They manifest in various ways. For instance, attention filters the raw data that enters the central nervous system. This data is always in the form of sensory input. Nevertheless, it avoids the overload of information in the brain. There are various criticisms against the concepts of cognitive psychology.

Behaviorists such as B.F. Skinner oppose the theories of cognitive psychology. According to them, the only determinant of behavior was external stimuli. They claim that there are no information processing procedures that take place in the central nervous system. Moreover, some of the behaviorists such as Carl Rogers believe that using the laboratory for practical research is not suitable and credible.

Conclusively, the post elaborates the various merits of cognitive psychology. Many fields of study utilize concepts that originate from cognitive psychology. It has led to an enhanced comprehension of educational psychology. Teachers and educational professional can now understand how the various forms of memory determine the learning rates of students. Besides, sociologists can now explain the origins of the various forms of social problems. An evaluation shows that aggressive individuals lack the appropriate schematic procedure of sensory perception and information processing. The field of developmental psychology has majorly benefited from understanding how the various cognitive functions relate. For instance, Jean Piaget extensively utilized the concepts of cognitive development to explain the various stages of development from childhood to adulthood. In summary, cognitive psychology is a fundamental section of psychology that explains the behavior of individuals.


Anderson, J. R. (1990). Cognitive psychology and its implications. WH Freeman/Times Books/Henry Holt & Co.

Bruning, R. H., Schraw, G. J., & Ronning, R. R. (1999). Cognitive psychology and instruction. Prentice-Hall, Inc., One Lake Street, Upper Saddle River, NJ 07458.

Mandler, J. M., & Johnson, N. S. (1977). Remembrance of things parsed: Story structure and recall. Cognitive psychology.

Rosch, E. (1975). Cognitive reference points. Cognitive psychology.

Siegler, R. S. (1976). Three aspects of cognitive development. Cognitive psychology.

Thorndyke, P. W. (1977). Cognitive structures in comprehension and memory of narrative discourse. Cognitive psychology.

Tversky, B. (1981). Distortions in memory for maps. Cognitive psychology.

Williams, J. M. G., Watts, F. N., MacLeod, C., & Mathews, A. (1988). Cognitive psychology and emotional disorders. John Wiley & Sons.

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Circular Flow Model Economics Report

Circular Flow

Title: Economic Circular Flow. Everyday expenditure is determined by the current treads on the economic status of a country. The prices of commodities has been influenced greatly by the prices treads of the energy generating fuels such the prices of the petroleum products. In addition the economic stability of a country is another key factors that determine the prices. For example in a country that is experiencing inflation, the prices of most commodities are relatively high, a fact that is contributed by poor performances in exchange rate earnings.

In most cases, the interest rates are mostly determined by the central bank. They are used as the main monetary tool that is used by policy makers and the economist to control the supply of money in the economy thus regulating the inflation rate in the economy. The central bank is there to issue loans to the commercial banks so that they can circulate the money to the citizens. In addition the commercial bank gives the commercial banks the directives on the minimum rate at which they are going to lend their customers. Therefore the federal system is the main determinant of the interest rate irrespective of the market forces on demand and supply of money.

Basically interest rate are use as incentive as well as disincentives to the people willing to take loans from any commercial banks. As an incentive, the commercial banks well give out loans at an affordable interest rate that will attract many business and other people willing to take a loan. This will increase the aggregate money supply in the economy. This is commonly used in case an economic stimulus is necessary. On the other had high interest rates discourages business taking loans.

The action leads to reduced business transactions and hence less amount of money circulation in the economy. The action is used during the period of inflation. When the interest rates are high, the prices of commodities are also relatively high, the consequence is high cost of financing the loans. For this reason people tend to purchase commodities that are of lower prices, this is always subject to quality. During my purchased the interest rate were lower therefore the price of my vehicle was relatively low. At the period the interest rate was about 14% compounded on reducing balance.

The price of gasoline was relatively lower compared to the previous prices. In every economy the prices of the petroleum products greatly influence the prices of other commodities. This is due to the transportation of commodities from the area of manufacturing to the market. Lower prices of gasoline in during the time of the purchase therefore ensured that the prices were lower and affordable. The prices for the crude oil and other related products were also low. Therefore even the maintenance of the vehicle was cheaper. When I made my purchase the prices of gasoline were dropping which was an implication that the future prices are going to be lower. This was just a prediction that is always necessary thing to do before buying any consumable good.

Securing a loan requires collateral and other securities. Most banks will. Always give loans to individual who after a careful appraisal shows the ability to pay the loan. In addition to this banks prefer giving loans to the people who are employed or business people who show to have a sustainable businesses that can be able to finance the acquired loan. I went for a loan after I was employed having considered all the above factors. These are the once that led to a successful loan application.

During the recession period the economy is characterized by high inflation rate meaning that the prices of most commodities are considerably high. During the purchase the interest rates were lower a probable recession times. The lower interest rates in the commercial banks were to encourage more people to take loans. This is a move that facilitates the increment in the supply of money circulation in the economy. In addition to this reduced interest rate facilitates more investors to borrow loans to set up more investments. This action is there to improve the production business cycle that improve the production of an economy.

During recession period there are chance of unemployment and therefore it’s risky to take a loan during the period. However when taking a loan it is important to reconsider other sources of income that can fund the loan once the source of income is suddenly withdrawn. Before making my decision on whether to take the loan or not I had considered other factors that will finance my loan in case of such uncertainty.

Due to the great recession of 2008 that the country realized its impact the government is still operating on with the fiscal expansionary policy measures despite of the deficit that the country was experiencing. Fiscal policies involved reduction on taxes and adjustments on government expenditures. The tax relieve lowered the prices of the vehicles greatly which gave me a good opportunity to purchase a good Car of my choice.

In addition the international monetary fund study had realized a possibility of positive multiplier effect on the expansionary fiscal policies that had been set. The effect was subjected unemployment and future output. More output and employment implied better future of the economy. These were encouragement to the foreign and local investors, consequently there were prospects of high future productivity. This gave me a prediction that there is a larger probability of retaining my source of income as well as creation of more sources that will cater for the maintenance and financing my loan.

The united state environmental protection agency has been trying over the years to fight the environmental pollution has been a problem in our cities and towns. One of their effort is to encourage the vehicles and other fuel users to purchase machines that are fuel saving and those that operate with complete combustion of fuel to minimize the release of carbon monoxide to the environment.

These efforts should not be ignored as the implication on pollution is both health and economic problems, a fact that a well productive economy is composed of healthy people. For this reason I had to choose a simple vehicle that has low fuel consumption capacity.

The emissions such as carbon dioxide causes acid rain that has adverse effects on metallic structures which most of our houses and other structures are made of. In addition there is adverse effect on agriculture which is one of the source of raw materials for our industries. The emissions also may cause diseases after inhaling these poisonous diseases. This consequently minimizes the production level of the nationals and hence lower GDP.

Basically the circular flow model is made up of two sectors which determine income output and expenditure. Equilibrium state is arrived at when the tendency of income levels, expenditure and output does not exist. This is an implication that income, output and expenditure are equal. The buyer expenditure in this case becomes the sellers’ income. The income gained from sale of their product is also spent to pay for other factors of production. During the processes, there is transfer of income to the owners of these factors. These expenditures consequently leads to the circular flow of payments.

The Circular Flow Model

Circular Flow Model
Circular Flow Model

For many years the position of the circular flow economy has greatly influenced the prices. This is due to the monetary and fiscal policies that an economy takes either to control inflation or to correct a recession. Introduction of injections and stimulus of the economy also influence the expenditure. When the interest rate are high the money in circulation is reduced thus most consumers will have little money to consume. In addition due to uncertainty people will tend to hold money due to fears of the deflation and recession. Uncertainty about future tend to influence people to either hold money or use money in making future investment.

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