For a given inflation rate, if a rise in the stock market makes consumers more willing to spend, then the ______ shifts _____.
A) aggregate demand curve; right
B) aggregate demand curve; left
C) aggregate supply curve; upward
D) aggregate supply curve; downward

Question

Quizplus · Accepted Answer

A rise in the stock market increases household wealth and can increase consumer confidence, leading to an increase in consumer spending. This increase in spending will lead to a rightward shift of the aggregate demand curve as there is a higher demand for goods and services. This would also cause an increase in output and prices.

For a Given Inflation Rate, If a Rise in the Stock