Suppose that an increase in consumer confidence raises consumers' expectations about their future income and thus increases the amount they want to consume today. This might be interpreted as an upward shift in the consumption fu ction. How does this shift affect investment and the interest rate? (3)

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Suppose that an increase in consumer confidence raises consumers' expectations about
their future income and thus increases the amount they want to consume today. This
might be interpreted as an upward shift in the consumption fu ction. How does this shift
affect investment and the interest rate?
(3)
Transcribed Image Text:Suppose that an increase in consumer confidence raises consumers' expectations about their future income and thus increases the amount they want to consume today. This might be interpreted as an upward shift in the consumption fu ction. How does this shift affect investment and the interest rate? (3)
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