From March 2018 to September 2019, Turkey's consumer confidence index fell from 99.1 to 94.2. How would such a change impact the IS curve in Turkey?
A)Decreased consumer confidence about the future lowers current consumption, causing the IS curve to shift left.
B)The increase in the consumer confidence index means consumers expect income to rise, and this increased consumer spending leads 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 implies a higher consumer confidence for the future, and this increases consumption and shifts the IS curve to the left.

Question

Quizplus · Accepted Answer

Decreased consumer confidence about the future lowers current consumption, causing the IS curve to shift left. This is because people are less willing to spend money when they are uncertain about the future, which leads to a decrease in demand for goods and services. This decrease in demand leads to a leftward shift in the IS curve, indicating a decrease in GDP.

From March 2018 to September 2019, Turkey's Consumer Confidence Index