Question: Assume we start at full-employment output in our AD-AS model. Now assume that electronic component prices go up due to semi-conductor shortages around the world.

Assume we start at full-employment output in our AD-AS model. Now assume that electronic component prices go up due to semi-conductor shortages around the world.

a) How would this affect prices and output in the short-run? Graph it please and carefully explain why prices and output change the way they do (use only AD-AS model).

b) How would this affect prices and output in the long run (assuming that semi-conductor prices come down in the long run)? Again, graph it and carefully explain why prices and output change the way they do (use only AD-AS model)

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