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1 vote
If consumer confidence decreases then aggregate demand will

increase and output and price level will increase as well.
decrease and output and price level will decrease as well.
increase and output will increase but price level will decrease.
increase and output will decrease but price level will increase.
decrease and output will decrease but price level will increase.

1 Answer

6 votes
The correct answer is: decrease and output and price level will decrease as well.

When consumer confidence decreases, it typically leads to a decrease in consumer spending. This, in turn, reduces aggregate demand, which is the total amount of goods and services that consumers are willing and able to purchase at a given price level. When aggregate demand decreases, it leads to a decrease in output (the total amount of goods and services produced) and a decrease in the price level (the average level of prices of goods and services in the economy).

Therefore, the correct option is that consumer confidence will decrease and output and price level will decrease as well.
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