Please read the FT article below (Oil price rise sparks growth fears as investors punish energy users) and address the following two questions: https://www.ft.com/content/4130028c-c5fb-4643-bdc7-c6da3b3bc0c9 a)

Using this article, explain how the price increase of crude oil will affect the aggregate economy of the European Union. Use the AD-AS framework to analyse the effect of that shock and explain clearly which variables will be affected and in which direction. (15 marks)

b) Now, assume that the crude oil price increases take place in a very uncertain economic environment because of the Ukrainian conflict and the recent Covid-19 pandemic. Explain how uncertainty would affect your previous conclusions. Again, use the AD-AS framework to analyse the effect and explain clearly which variables will be affected and in which direction. (10 marks)