From September 2017 to April 2018, South Africa's consumer confidence index rose from 98.8 to 103.2. How would such a change have impacted the IS curve in South Africa?
A)Decreased consumer confidence about the future lowers current consumption, which would cause the IS curve to shift left.
B)The increase in the consumer confidence index means consumers expect income to rise, and this increase in consumer spending would lead to a right shift in the IS curve.
C)The IS curve is not affected by changes in consumer confidence.
D)The decreased consumer confidence today would imply a higher consumer confidence for the future, and this would increase consumption and shift the IS curve to the left.

Question

Quizplus · Accepted Answer

An increase in consumer confidence suggests that consumers expect improvements in the economy and their personal financial situations, leading to an increase in consumer spending. This increase in spending would shift the IS curve to the right as it depicts the relationship between interest rates and aggregate output in the short run.

From September 2017 to April 2018, South Africa's Consumer Confidence