In the context of Aggregate Demand and Supply Analysis, how would a significant increase in consumer confidence affect the economy in the short run and long run, considering both shifts in demand and supply?

When consumer confidence increases significantly, people feel more secure about their jobs and financial situations, leading them to spend more money. In the short run, this higher spending boosts aggregate demand because consumers buy more goods and services, which can cause businesses to produce more to meet this demand. As a result, the economy might see higher output and employment levels, as companies hire more workers to keep up with the increased demand. However, in the long run, if this increased demand leads to higher prices, it can also prompt businesses to invest in expanding their production capacity, shifting the aggregate supply curve to the right. For example, if more people buy cars, car manufacturers might build new factories, which helps the economy grow sustainably over time.