Final answer:
An increase in wealth due to a rise in stock prices shifts the aggregate demand curve to the right, not along a fixed curve, resulting in higher GDP and price levels.
Step-by-step explanation:
An increase in wealth from a substantial increase in stock prices will actually not move the economy along a fixed aggregate demand (AD) curve. Instead, it will cause a shift in the AD curve to the right. This is because a rise in the value of the stock market would typically make individuals feel wealthier and more confident about their economic situation. This increased consumer confidence often leads to an increase in consumer spending, resulting in a shift of the AD curve. Consequently, the effect of this shift is an increase in the equilibrium level of GDP and a rise in the price level, as there is more demand for goods and services within the economy.