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Question 1 In recent years, many countries around the world have experienced atypical weather conditions, which have affected the production and prices of many of their products

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Question 1 In recent years, many countries around the world have experienced atypical weather conditions, which have affected the production and prices of many of their products. Assume that a country is hit by especially unfavorable weather conditions, which result in severe disruption of agricultural production. As a consequence, the prices of many agricultural products and food items experience a significant increase. This event would be captured in our AD/AS model as an adverse shock to the SRAS. This shock will shift the SRAS (up/down) ? and (increase/decrease) the level of output Y in the short run. The economies of most countries are affected by changes in the price of oil. As energy is used in a large number of productive processes, oil prices can affect the cost of production of a wide range of goods and services. Assume that a sharp decline in oil prices results in decreased costs of production and prices of many goods and services in the economy. This event would be captured in our AD/AS model a beneficial shock to the SRAS. This shock will shift the SRAS (up/down) A and increase/decrease) the level of output Y in the short run. A