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Long-run macroeconomic equilibrium and the stock market boom. Assume that a hypothetical economy is at long-run macroeconomic equilibrium, with full employment and stable prices. Suddenly
Long-run macroeconomic equilibrium and the stock market boom. Assume that a hypothetical economy is at long-run macroeconomic equilibrium, with full employment and stable prices. Suddenly the stock market prices increase much more than expected, increasing investor's wealth, and causing a short-term period of unusually increased optimism about the future of the economy.
Question 1: what, if any, impact will there likely be on workers' wages, and the reasons for this impact?
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