Instructions: For each of the following, illustrate and explain the changes to AD and AS,

output, price levels and employment that will occur in the short-run and in the long-run. Assume

that wages are "sticky" in the short-run and "flexible" in the long-run.

8. A hurricane destroys several off-shore oil rigs, leading to higher transportation and

energy prices. Soon after, the government announces a multi-billion-dollar spending plan

to rebuild damaged coastal cities.

Explain the short-run and long-run consequences of the change described:

The United States Economy PL LRAS SRAS Pe AD Yfe GDP