Final answer:
True, increased consumer confidence about the economy usually leads to higher spending, as optimistic expectations about future income drive up consumption and aggregate demand.
Step-by-step explanation:
True. When consumers become more confident about the economy, their consumer optimism often leads to increased spending and consumption. This is because positive expectations about future income influence consumers to spend more, driving up overall aggregate demand.
For instance, during periods of economic growth, consumer confidence typically runs high, resulting in greater consumption. Conversely, in times of recession or when faced with economic uncertainties such as stock market downturns or negative forecasts, consumers tend to save more and reduce their spending.
Consumer confidence plays a significant role in driving economic growth. When consumers feel optimistic about their financial situation and the overall state of the economy, they are more likely to spend money on goods and services. This increased consumption leads to higher demand, which can stimulate economic growth.