If business confidence increases,
A)there will be an upward movement along the AD curve.
B)there will be a downward movement along the AD curve.
C)the AD curve will not be affected.
D)the AD curve will shift to the left.
E)the AD curve will shift to the right.

Question

Quizplus · Accepted Answer

An increase in business confidence will lead to an increase in investment and consumption, which will shift the aggregate demand (AD) curve to the right. This is because businesses will be more willing to invest and expand, leading to an increase in output and employment. Consumers will also be more willing to spend if they feel more confident about the economy and their own financial situations. Therefore, the AD curve will shift to the right, indicating an increase in both the price level and real GDP.

If Business Confidence Increases