explain the possible impact of an encrease in wealth and consumer confidence on aggregate demand

Aggregate demand is the total demand for goods and services in an economy
AD= C I G (X-M)
There are known as the components of A and added together decide in the total demand in an economy. It is measure of GDP
It represent investment, is the addition to the capital stock of economy.
Represents the government spending
X represent the exports and M represent the imports of economy C is the consumers consumption, the combined spending of all households in an economy.
Several factors may determine house much a household will consume. The consumers incomes affect their consumptions, the more money a consumer earns, the more will be able to spend. The interest rates are another factor, the higher the interest rates, the less people will borrow money from the bank and therefore spend less money on durable items .
The households indebtedness will also have an impact on the consume, saving their money to pay off their debts.
An other very important factor that will affect consumption is the consumers confidence, it its the outlook that consumers have towards the economy and their own personal financial situation. The more consumers feel confident about their financial situation , the more they will spend.
Finally, wealth effect is a important factor affecting consumption. It is behavioral economic theory suggesting that people spend more as the blue of their assets rice, or vice- versa.
For example, if the price levels rise, at given level of wealth, then people’s real wealth will fall (for example the value of their house or savings). This implies that incomes stay the same ( ceteris paribus ). Therefore, people will feel less wealthy, and will probably spend less money on goods and services. In contrary, if the value of their assets rise, they will spend more.
Therefore, an increase in wealth and consumer confidence will lead to an increase in consumer consumption, and this will cause the aggregate demand curve to shift to the right, as represented in the following diagram.