Explain how each ofthe following shocks can impact the demand orsupply of oil: A. A worldwide economic recession. B. Improved oildrilling technology. C. War in a majoroil producing country. D. Greaterenvironmentalawareness about climate change.
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Explain how each ofthe following shocks can impact the
A. A worldwide economic recession.
B. Improved oildrilling technology.
C. War in a majoroil producing country.
D. Greaterenvironmentalawareness about climate change.
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Solved in 2 steps
- how each of the following shocks can impact the demand or supply of oil: A. A worldwide economic recession. B. Improved oil drilling technology. C. War in a major oil producing country. D. Greaterenvironmental awareness about climate change.Illustrate and interpretthe short-run and longrun effects of temporary and permanentsupply shockshow would scenarios A- Recession & B-Economic Boom affect the opportunity cost of going to college vs going to work immediately after high school? in which scenario is the opportuinty cost of going to college higher ? why ?
- Complete the following questions using the 6-quadrant diagram showing the effects of each shockbelow. For each shock explain and show- Explain how the shock affects the model (what changes?)Then show- What happens to output (real GDP)- What happens to the Price level P- What happens to real wages (w/P)- What happens to real Capital payments (R/P)Who is better or worse off after the shock: labor, capital owners, or both and explain yourreasoning. c) A sudden pandemic occurs in an economy that results in a large loss of life.d) A large increase in the level of taxation in the economy.e) An increase in the money supply in the economy. Do any of the shocks above illustrate the classical dichotomy (that nominal changes only have nominalbut not real effects)? If so, which ones?Using the ASAD graph and starting in long run equilibrium YA = Y* (see the model example in the textbook Figure 13.11) take each of following shocks one by one in separate graphs and decide if the event falls into the real shock (LRAS) category or aggregate demand (AD) shock category. Then graph each. Remember that “shocks” include both good and bad events and the graph should show that in the short run the economy is either that YA < Y* or YA > Y* A fall in the input price of oil A rise in consumer optimism A cut in business taxes if they buy new equipment Foreigners buy fewer US made goods. Consumer Fear New inventions (A) occur at a faster pace than usual A faster money growth rate A permanent cut in income taxesSuppose the economy of the hypothetical country “X” is currently in equilibrium at point A on thegraph. There were two major shocks to the economy in 2020.First shock was related to oil prices; the other was related to consumer confidence about futurebusiness conditions. Oil Shock: The economy X faced a rise in the average price of oil along with the rise of world price ofoil.E) Would an increase in oil prices cause a demand shock or a supply shock? Redraw the diagram toillustrate the effect of this shock by shifting the appropriate curve. What happens to theAggregate output and price level after the shock? (3)F) If policymakers wish to prevent the equilibrium output from changing in response to the oilprice increase, should they use contractionary or expansionary fiscal policy? (Redraw the graphfrom part E and show the change) (4)G) Even if the economy moves back to original Aggregate output, will there be any drawback? (1)Consumer Confidence Index: The Consumer Confidence Index…
- Consider the market for dry vegetables. Suppose that there is increased taste for a healthy diet. What is the intial effect of this shock in the market for dry vegetables?What is a V shaped shock and recovery of an economy. What is a U shaped shock and recovery of an economy? What is an L shaped shock and “recovery” of an economy? What is a K shape shock and ‘recovery’ of an economy? Provide examples for each. What kind of shock will the implications of the Corona Virus cause to the economy?Explain the steps that needs to be taken to avoid the unexpected shocks of the market.
- On average, households spend 22.37 cents out of each dollar ofincome shocks. When people receive an additional dollar (an “income shock”), how many additional cents of that dollar do people spend on average.Equity prices have fallen substantially in the last several months. Moreover, housing prices may see declines in light of the economic slowdown. Show and explain with whichever model(s) may be helpful and explain how these shocks could affect the U.S. economy in the short and long runs.Suppose the US economy enters a recession. During the recession, inflation falls and interest rates rise. What kind of change ("shock") to demand and or production is likely cause of the recession? Answer in one short paragraph. Note:- Please avoid using ChatGPT and refrain from providing handwritten solutions; otherwise, I will definitely give a downvote. Also, be mindful of plagiarism. Answer completely and accurate answer. Rest assured, you will receive an upvote if the answer is accurate.