For the following questions, begin with an economy in AS-AD long-run equilibrium which is then hit by some event. Please draw a new diagram for each question. And answer in details for each of the questions:

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  a. Because of Russia – the Ukraina war, there is an oil shock as the price of oil unexpectedly increases. Depict the impact on your diagram. Explain at least one way the economy could return to long-run equilibrium. ( 1 point )

  b. Continue from question a, there is a large influx of immigrants into the European economy so there is an increase in the labor supply. Depict the impact on your diagram. Explain how the economy could return to long-run equilibrium ( 1 point )

  c. New Vinfast electricity cars have arrived that have increased consumption expenditure across the economy and thus shifted aggregate demand. Depict the impact on your diagram. Explain how the economy could return to long-run equilibrium. (1 point)

  d. In question c, the price level increases caused is also known as demand-pull inflation or cost-push inflation? Please explain in detail ( 1 point )

  
  

  
  

  
  

Answer rating: 100% (QA)

a There is an oil shock which increases the price of oil Thus the aggregate supply curve would shift ... View the full answer