2) Please answer the following parts: A. Describe the short-run effects of a rise in oil prices. B. Describe the adjustment to the long-run equilibrium. What variable should adjust for that to happen? C. Explain how the government should react in order to offset the effects of this shock on output. What will be the result regarding the price level? D. Explain how the Fed should react in order to offset the effects of this shock on output. What will be the result regarding the price level?

2) Please answer the following parts: A. Describe the short-run effects of a rise in oil prices. B. Describe the adjustment to the long-run equilibrium. What variable should adjust for that to happen? C. Explain how the government should react in order to offset the effects of this shock on output. What will be the result regarding the price level? D. Explain how the Fed should react in order to offset the effects of this shock on output. What will be the result regarding the price level?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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