When stock prices rise more than expected and stay high for some time........?

Question

.....In the long run, the change in price expectations created by the stock market boom shifts what curve and what direction?

Answer 1

Booms are to burst sooner or later. Expectations give way to apprehensions and booking profits. The crowd psychlogy brings price down southwards. The boom shifts the LM curve because as stock prices rise, the expected dividend yield falls.

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