What can increase as a consequence of higher consumer confidence?

Higher consumer confidence typically leads to increased consumer spending because when individuals feel confident about their financial situation and the overall economy, they are more likely to make purchases. This confidence can stem from factors such as job security, positive economic indicators, or rising income levels. Consequently, consumers may feel more inclined to buy goods and services, which stimulates demand in the economy.

This uptick in consumer spending can positively impact businesses, prompting them to increase production levels to meet the higher demand. This cycle can further lead to economic growth as businesses invest in expanding their operations and hiring more employees, creating a virtuous cycle of spending and economic activity.

In contrast, increased savings rates may occur when consumer confidence is low, as individuals tend to save more during uncertain economic times. Decreased production levels might happen if there is a lack of demand, while lower investment in businesses could result from factors such as economic uncertainty or reduced consumer spending, rather than being influenced by higher consumer confidence. Therefore, the correct answer highlights the direct relationship between consumer confidence and spending behavior.