How does the AD-AS MODEL show how the rising price of oil would affect a macro economy?

What happens to the inflation rate and the level of gdp? Show also wat would happen if there was, in addition to this a fall in business and consumer confidence i.e. people are reluctant to spend?


(if you can then please email me the answer in srijan0@yahoo.com because it has figures too)How does the AD-AS MODEL show how the rising price of oil would affect a macro economy?
Rising price for oil means supply-shock, thus AS will shift left, this consequently will reduce equilibrium output of economy and increase price level.


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Fall in consumer and business confidence will mean demand shock, thus this event will shift AD left too. It will lead to fall in price level (or restoring thus offsetting AS shock) and will reduce equilibrium output even more (if AS is not vertical but upward-sloping).


http://bp1.blogger.com/_pMscxxELHEg/RqZz鈥?/a>





http://welkerswikinomics.com/blog/wp-con鈥?/a>


http://welkerswikinomics.com/blog/wp-con鈥?/a>


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