Question

Show graphically how a positive (favorable or good) supply shock would impact the AS/AD curve. (Assume...

Show graphically how a positive (favorable or good) supply shock would impact the AS/AD curve. (Assume you start at a long-run equilibrium and assumption that some, but not all prices are sticky in the short-run) Be sure to label all axis and any shifts of any curves

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Answer #1

Take a positive supply shock as the one where oil prices have reduced and this has reduced fuel cost so production is increased

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