A favorable economic outlook is shared in an announcement in the news by the government. Consumers are now confident about the future strength of the economy and the availability of jobs; illustrate the effect of this on the American economy by shifting the aggregate demand (AD) curve in the appropriate direction.

Provide your answer below:
a. Aggregate Demand
b. New Equilibrium
c. Original Equilibrium
d. Aggregate Supply

a. Aggregate Demand

Explanation:

When the consumers are confident about the economy their investment and consumption activities will increase and this increases the aggregate demand in the economy. The effect of America economic is aggregate demand shift right and the gdp increases

When the AD curve shifts to the right it increases the level of production and the average price level. When an economy gets close to potential output, the price will increase more than the output as the AD rises and aggregate demand curve only tends to shift to the left when total consumer spending declines and the reason behinde consumers spending less is because the cost of living is rising

a. Aggregate Demand

Explanation:

When the consumers are confident about the economy their investment and consumption activities will increase and this increases the aggregate demand in the economy.

The effect of America economic is aggregate demand shift right and the gdp increases

When the AD curve shifts to the right it increases the level of production and the average price level and aggregate demand curve only tends to shift to the left when total consumer spending declines and the reason behind consumers spending less is because the cost of living is rising

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