Figure 2
Stable Growth
Name:________________________________
Economics 121 A & B
Spring 1997 - Prof. Becker
(6 points) Draw two graphs of aggregate demand (AD) and aggregate supply (AS) in the spaces below.
On figure 1, show the effect of the OPEC embargo (1973-4) on AD and AS. The embargo raised oil prices significantly. Oil is used to produce or transport most goods and so made almost all production more expensive.
On figure 2, show how AS and AD may have been shifting over the last few years. During that time, our economy has been experiencing low inflation and steady growth of real GDP.Figure 1 Oil Price Increase
Figure 2
Stable Growth
