posted a question
1. In the boom years of the late 1990s, it was often said that rapidly increasing stock prices were responsible for much of the rapid growth of real GDP. Explain how this could be true, using aggregate demand and aggregate supply analysis 2. Suppose you read in the newspaper that rising oil prices would contribute to a global recession. Use aggregate demand and supply analysis to explain how high oil prices could reduce real GDP
Tutor answered the question
Dear Student Please find attached solution of your assignment. Regards  

Download Preview:

Answer to Q1:
We know that,as price of stocks or bonds increases, rate of interest decreases in IS-LM model
and vice versa. Now, during recession, increases in stock price leads to excess demand in...