What typically happens when consumer confidence is high?

When consumer confidence is high, individuals feel more secure in their financial situations and are more likely to spend money. This optimism encourages higher levels of consumption, which is a significant component of aggregate demand. People are inclined to make purchases, from everyday goods to major investments, as they anticipate stable or improved economic conditions in the future.

As a result, consumer spending drives an increase in aggregate demand. This positive sentiment can lead businesses to invest more, further boosting economic activity. Overall, high consumer confidence typically correlates with an increase in aggregate demand, making this choice the most accurate reflection of the situation.