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Assume an economy in long-run equilibrium if there is a


Assume an economy in long-run equilibrium. If there is a rise in the stock market that increases the value of stocks held by households, which of the following will be true?

  1. Inflationary gap develops.
  2. Recessionary gap develops.
  3. Expansionary policy should be used to return the economy to equilibrium.
  4. Contractionary policy should be used to return the economy to equilibrium.
  5. Economy remains in long-run equilibrium.

 V only. I and III only. II and III only. I and IV only. II and IV only.

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Macroeconomics: Assume an economy in long-run equilibrium if there is a
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