Because of a stock market crash consumer and business


Question: Because of a stock market crash, consumer and business optimism declines, so both consumption and investment drop. On a ceteris paribus basis, a drop in C is equal to an increase in Sp, so saving rises while investment falls. Explain how the economy returns to equilibrium where I = S on an ex post basis.

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Microeconomics: Because of a stock market crash consumer and business
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