Could someone please tell me if this is correct?
1. a. Suppose the stock market rises, increasing consumers' wealth and consumption. Show the effect on the AD/AS graph.
b. If there is an increase in the inflation rate, how would the Fed change the monetary policy so that there are more stable prices and GDP goes back to potential?
1. a AD would shift to the right and the SAS curve would shift up.
b. The Fed would employ the contractionary monetary policy and the equilibrium would be at potential GDP
Thank you in advance