Over the last couple of years, food prices have increased substantially. Present two separate supply-demandanalyses to explain why the observed price increases could come from two fundamentally different causes.In one of your analyses, show that some “negative supply side shock”, like the Covid lockdowns that disruptedsupplies of goods and services, could have caused the observed increase in prices. In your other analysis,show that some “positive demand side shock”, like the large increases in government spending associatedwith Covid, could have caused the observed increases in prices. For full credit, identify how the results of thetwo analyses differ, and explain how you could use that difference to decide which type of shock was moresignificant in terms of explaining the observed price increases.
Over the last couple of years, food prices have increased substantially. Present two separate supply-
analyses to explain why the observed
In one of your analyses, show that some “negative supply side shock”, like the Covid lockdowns that disrupted
supplies of goods and services, could have caused the observed increase in prices. In your other analysis,
show that some “positive demand side shock”, like the large increases in government spending associated
with Covid, could have caused the observed increases in prices. For full credit, identify how the results of the
two analyses differ, and explain how you could use that difference to decide which type of shock was more
significant in terms of explaining the observed price increases.
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