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Stock prices in Richland declined suddenly after one of the largest banks in Richland faced ...

Stock prices in Richland declined suddenly after one of the largest banks in Richland faced bankruptcy. If animal spirits play an important role in shaping Richland's economy and assuming all else remains equal, which of the following is likely to happen?

▸ Wage levels in Richland will fall.

▸ Richland's consumption expenditure will increase.

▸ Investment by firms in Richland will increase.

▸ Unemployment in Richland will fall.

Textbook

Macroeconomics

Edition: 3^rd

Authors: Acemoglu, Laibson, List

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