The Stock Market Boom of 2015, Imagine that in 2015 the economy is in long-run equilibrium. Then stock prices rise more than expected and stay high for some time. Refer to Stock Market Boom 2015. In the long run, the change in price expectations created by the stock market boom shifts. Which curve shifts and in which direction? a. aggregate demand shifts left. b. aggregate supply shifts left. c. aggregate demand shifts right.d. aggregate supply shifts right.

The aggregate demand curve will shift to the right. This is because since the stock price rises, there will be an increase in the level of demand for goods and services as a results of consumers in the economy feeling wealthy. Generally, a shift to the right of a demand curve is as a result of increase in the aggregate demand. That is, more people are willing to purchase more goods and services at a particular point in time.