Question

1. Using AD/AS, describe the short-run and long-run effects of an increase in the money supply on the equilibrium level of production and the price level. Be sure to explain what happens to Total Expenditures (using the 3 effects of spending changes as a result of changes in the price level).



2. Using AD/AS, describe the short-run and long-run effects of an increase in the price of oil.

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