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Read the questions carefully. Show all the necessary steps and reasonings that lead to your answer.Describe...

  1. Read the questions carefully. Show all the necessary steps and reasonings that lead to your answer.Describe the effects of each of the following events on the US economy (i.e. What may happen to the price? To the real output?). Explain briefly what cause these effects (i.e. What happens to determinants of AD or AS or both? Why? ).Illustrate your answers in given AD-AS diagrams. Label your diagrams and changes carefully.

a.(10 points) US dollar appreciates significantly.

b. (10 points) A hurricane destroyed major gas pipelines and resulted in a sharp increase in energy prices for months.

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