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Answer to Question #109794 in Macroeconomics for Kalyn
Question #109794
The stock market crashes; billions are lost. What happens to aggregate supply and aggregate demand. What happens to price level in real GDP?
Expert's answer
A stock market crash leads to a leftward shift of aggregate demand. The equilibrium level of output and the price level will fall. Because the quantity of output is less than the natural rate of output, the unemployment rate will rise above the natural rate of unemployment.
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