1.a. What is the difference between procyclical and countercyclical economic variables. Give one example for each type of economic variable.

b. What is the difference between short run and long run in macroeconomic analysis?

2.Assuming that the economy is initially at long run equilibrium, what are the short-run and long-run effects of a sharp increase in oil prices (a temporary negative supply shock) on output and inflation? Explain using AD-AS diagrams.

3.a. What is the monetary policy (MP) curve? Why does it slope upward?

b. How does an autonomous easing monetary policy by a central bank affect the MP curve?