Question

A positive oil price shock (an inflation shock) has occurred. Using the AS/AD framework, please compare...

A positive oil price shock (an inflation shock) has occurred. Using the AS/AD framework, please compare
and contrast the effect of this inflation shock on the economy using the standard AD and then using the Taylor AD. You must use an
AS/AD diagram to show your answer for each (Standard AD and Taylor AD).

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Answer #1

in standard AD we have only focus on the AD, AS, price and output. but in Taylor's it not only look on those as pects but also measures the dynamic effect mechanism very in acordance to shock.

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