1. Describe the short-run effects of each of the following shocks on output and inflation in the Aggregate Demand-Aggregate Supply model, using pictures to illustrate your answers. Explain which curves shift and why. Also describe what happens in the medium-to-long run to output and inflation, again using pictures to illustrate your answers. Explain which curves shift and why.

(a) An earthquake in the Middle East destroys oil fields and permanently reduces the supply of energy.

(b) The Fed tightens monetary policy drastically (more than the Taylor Rule would imply) to fight inflation

(c) Consumer spending increases after President Biden cancels student debt for millions of households

(d) Productivity soars after companies realize that many workers are more productive working from home rather than the office.