Using the Ad/AS model, explain why stock prices rise when there's talk of a vaccine for Covid-19

Question

Using the Ad/AS model, explain why stock prices rise when there's talk of a vaccine for Covid-19 and they fall when the number of cases spikes higher. Hint: stock prices are not a variable in our model, but they do reflect the future profitability of US companies. Remember too that most American-made products are consumed domestically.

Answer 1