zuesuon o ju point A stock market bust leads to a decrease i

zuesuon o ju point A stock market bust leads to a decrease in wealth in the economy. What happens to equilibrium price and RGDP in the economy? 1) Equilibrium price and equilibrium RGDP increase 2) Equilibrium price and equilibrium RGDP decrease. 3) Equilibrium price will rise and equilibrium RGDP will fall. 4 Equilibrium price will fall and equilibrium RGDP will rise . Save

Solution

Ans

Equilbrium price will fall and equilbrium RGDP falls. This is because due to lower wealth Aggregate demand shifts leftwards