Question

Using an AD, SRAS, and LRAS curve, explain the effect of the following events on the aggregate-output,

unemployment and price level both in the short-run and in the long-run. Explain the process by which the economy moves from one long-run equilibrium point to another.

(a) There is an increase in oil-prices (and no intervention from the government or the Fed).

(b) The Fed increases money supply (after the initial increase in oil-prices).

price
RRAS
Gaurav
SKAS
DATE :
20
PAGE No
SRASI
B
A ADI
AD
Aggregate output.
Initially n the economy is in longlen
equidb rium at A. Now Due to macase in
oil !
price 8 Short run Aggregate Supply…
Economics