What is the outcome of an increase in consumer confidence on the economy?

An increase in consumer confidence generally leads to increased demand for goods and services within the economy. When consumers feel confident about their financial situation and the overall economic outlook, they are more likely to spend money on various products, from everyday items to luxury goods. This boost in spending stimulates business activity, as companies respond to the heightened demand by producing more goods and possibly hiring additional workers.

Increased consumer spending can lead to higher sales revenues for businesses, which can further contribute to economic growth as companies may invest more heavily in expansion and inventory to meet the increased demand. This cycle can create a positive feedback loop, amplifying the overall economic activity.

Thus, the correct answer highlights how consumer confidence plays a crucial role in driving demand and ultimately shaping the economy's trajectory.