High Self-esteem = Higher Prices

Confidence is a factor that affects aggregate demand. In the US, it seems that there is a rise in consumer’s confidence. The Board’s index of consumer attitudes rose to 57.9 from a  52.3 in March. The increasing confidence was caused by growing optimism about the labor market.

Consumer Confidence and Aggregate Demand

In the graph above, the aggregate demand increases. This is because the consumer confidence increased too. Since the aggregate demand increased, the quantity and the price increased too.

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