Long-run macroeconomic equilibrium and stock market boom

Assignment Help Business Economics

Reference no: EM13838889

Long-run Macroeconomic Equilibrium and Stock Market Boom Let us assume the economy reaches its long-run macroeconomic equilibrium in 2020. When the economy is in the long run macroeconomic equilibrium, the stock market will also reach its boom. This will in turn lead to increases in stock prices more than expected, and the stock prices will stay high for some period. Answer the following questions based on the scenarios of long macroeconomic equilibrium and consequent stock market boom.

a) Which curve will shift? Is it AS curve or AD curve? In which direction does the shift occur?

b) In the short-run, what will happen to the price level and output (real GDP)?

c) What will happen to the expected price level? What impact does this have on wage bargaining power of workers?

d) In the long-run, which curve will shift due to the change in price expectations created by the stock market boom? In which direct will it shift?

e) How does the new long-run macroeconomic equilibrium differ from the original equilibrium?

Reference no: EM13838889

Questions Cloud

Find the monopolists maximum profit : A newspaper has a monopoly on the local news market in a town. The market demand is given by P=1.70-Q/20,000, making the marginal revenue MR=1.70-Q/10,000. The marginal cost is constant at equal to 0.80. The fixed cost is 2,000. So, the total cost is..

About the producer surplus : Producer surplus is the...

Explain the stages involved in the preparation of budgets : Identify and explain briefly the stages involved in the preparation of budgets clearly describing the roles of the managers and budget committees. Explain how the use of spreadsheets may improve the efficiency and accuracy of the budget preparation p..

The long-run average-total-cost curve shows : Which of the following statements is false in the short run? The long-run average-total-cost curve shows.

Long-run macroeconomic equilibrium and stock market boom : Long-run Macroeconomic Equilibrium and Stock Market Boom Let us assume the economy reaches its long-run macroeconomic equilibrium in 2020. When the economy is in the long run macroeconomic equilibrium, the stock market will also reach its boom. Which..

What impact did the appall have on black and white america : Vincent Harding notes that David Walker's1829, was one of the earliest radical statements in the great tradition of I\firkin American protest thought. It indicted white America, challenged the dehumanizing system of chattel slavery

State any seven refrigeration systems : State any seven refrigeration systems, mention the methods employed to attain low temperatures, and state any merits and limitation of that system.

Develp a simple model of an object-oriented system : you are going to develp a simple model of an object-oriented system. this model should be able to provide all the working examples of inheritance, encapsulation, and polymorphism through the use of class,. methods, and objects

How did your team plan the group presentation : How did your team plan the group presentation? What worked well during the group presentation? What did not work so well during the group presentation? If you had to do the presentation again, what would you do differently?

User Account

All Pages