What effect does an increase in consumer confidence have on the aggregate demand curve?

When consumer confidence increases, people feel more secure about their jobs and financial situations, which makes them more willing to spend money. This boost in spending leads to higher demand for goods and services, causing the aggregate demand curve to shift to the right. For example, if families decide to buy new cars or renovate their homes because they believe the economy is doing well, this increase in purchases raises overall demand. As a result, businesses may produce more to meet this demand, leading to economic growth. Therefore, an increase in consumer confidence typically signals a stronger economy and a higher level of aggregate demand.