A decrease in consumer confidence will likely have which of the following effects?

Question

Quizplus · Accepted Answer

A decrease in consumer confidence will lead to a decrease in consumption and therefore a decrease in aggregate demand. This will result in a leftward shift in the IS curve, as less output is demanded at any given interest rate. It will not affect the LM curve, as it is determined by the money market and not by changes in consumer behavior.

A Decrease in Consumer Confidence Will Likely Have Which of the Following