A higher level of consumer confidence will lead
A) output to increase and price to decrease in the short run.
B) output to increase and price to increase in the short run.
C) output to increase and price to remain the same in the short run.
D) output to remain the same and price to increase in the short run.

Question

Quizplus · Accepted Answer

A higher level of consumer confidence indicates that consumers are willing to spend more, which leads to an increase in demand for goods and services. In the short run, this increase in demand will result in an increase in output, and since demand exceeds supply, prices will also increase. Therefore, output will increase and price will increase in the short run.

A Higher Level of Consumer Confidence Will Lead