Because it has a direct effect on the hiring decisions of firms,a change in business confidence has a much larger impact on the level of economic activity than does a change in consumer confidence.

Question

Quizplus · Accepted Answer

Business confidence does impact hiring and investment decisions, but consumer confidence directly affects consumer spending, which is a major component of economic activity. Changes in consumer confidence can therefore have a significant and immediate impact on the economy, sometimes even more so than changes in business confidence.

Because It Has a Direct Effect on the Hiring Decisions