Increases in consumer confidence
A)decrease consumption in direct proportion to the increase in consumer confidence.
B)directly increase consumption.
C)tend to increase consumption spending.
D)increase consumption only when the overall price level decreases in the economy.
E)tend to increase household saving.

Question

Quizplus · Accepted Answer

When consumer confidence increases, people tend to feel more optimistic about their financial situation and the economy as a whole. As a result, they may be more likely to spend money on goods and services, which leads to an increase in consumption spending. This can have a positive effect on the economy by promoting economic growth and job creation. Therefore, the correct answer is C - increases in consumer confidence tend to increase consumption spending.

Increases in Consumer Confidence