Assume a closed economy is currently in general equilibrium {i.e., the goods market {IS}, asset market {LM}, and the labour market {FE} are simultaneously in equilibrium}. Also. assume prices in this closed economy adjust rapidly. Since prices adiust rapidly, it means the Keynesian view of price adjustment holds. If there is an increase in the stock market. it will increase consumer wealth and citizens will increase consumption causing the IS curve to shift up and to the right. To return the economy back to the general equilibrium, the Bank of Canada should increase the money supply, since with higher income, people's demand for real money balances will be higher