Final answer:
An unexpected increase in investor confidence and a sharp increase in orders for new plants and equipment typically leads to accelerated economic growth, an increase in GDP, and potentially a decrease in unemployment.
Step-by-step explanation:
If there is an unexpected increase in investor confidence leading to a sharp increase in orders for new plants and equipment, the most likely outcome is that economic growth accelerates. This is because higher levels of investment in capital goods, such as plants and equipment, typically lead to an increase in productivity and, consequently, Gross Domestic Product (GDP). Moreover, as businesses expand and invest, they often need to hire more workers, which can lead to a decrease in unemployment. In turn, this could potentially lead to rising wages and increased consumer spending, which feeds back into the economy, promoting even more growth.
Other factors such as rising inflation, a rise in the natural rate of unemployment, an increase in oil prices, or a stock market collapse can interact with these dynamics in complex ways. For example, increased investment and economic growth may lead to inflation if the increase in aggregate demand exceeds the economy's potential GDP. Conversely, a rise in the natural rate of unemployment or higher oil prices might temper growth by increasing costs for businesses and consumers.