Understanding Economics

Source: https://www.westwriters.com/understanding-economics/

Consumer confidence is an economic indicator that examines the level of optimism and

satisfaction that customers have about economy as well as their financial situations (Fisher &

Statman, 2003). It plays a vital role in the economy because it makes consumers to deposit

money in the bank with trust, thus balancing the economy because the banks will have enough to

lend to other people and get profit. Pulling money from the banks and putting it in homes is a bad

idea. Pulling money will reduce money supply that leads to a decreased GDP. When GDP

decreases, economic growth does not grow, and this reduces output, income as well as

employment and price over time. This leads to deflation. Withdrawing money from the banks

also means that there will be increase interest rates that affect savings. High interest rate induces

the supply of savings, but because the cost of borrowing will be…