Consumption and investment make up a big part of the economy, and this chapter looks at how people spend money when their income changes. It also talks about how interest rates affect spending. People don't just think about their current income when deciding what to buy, they also consider their lifetime resources. A simple model can predict how people spend on everyday things, but it doesn't work for big purchases that last a long time. Durable goods, like cars or appliances, are used over many years even though they are bought in one go. It's important to separate the act of buying a durable good from actually using it.