What is a consequence of consumer confidence rising?

An increase in consumer confidence typically leads to an increase in aggregate demand. When consumers feel confident about their financial situation and the overall economy, they are more likely to spend money on goods and services. This rise in consumption contributes directly to higher aggregate demand, as households begin to increase their expenditure on various items, ranging from everyday necessities to luxury goods.

Greater consumer spending can stimulate economic activity, encouraging businesses to invest in production, hire more employees, and potentially raise wages. This positive cycle can further boost consumer confidence, sustaining overall economic growth.

In contrast, when consumer confidence is low, individuals tend to save more and spend less, which might result in a decrease in aggregate demand, but an increase in confidence inherently encourages the opposite behavior. Therefore, the correct answer highlights the relationship between rising consumer confidence and an increase in aggregate demand.