Q. (IS-MP-AS with an oil price shock) Suppose the economy is hit by an unexpected oil price shock that permanently raises oil prices by $50 per barrel. This is a TEMPORARY increase in o in the model: the shock o becomes positive for one period and then goes back to zero.

(IS-MPAS with an oil price shock) Suppose the economy is hit by an unexpected oil price shock that permanently raises oil prices by $50 per barrel. This is a TEMPORARY increase in 6 in the mode]: the shock 6 becomes positive for one period and then goes back to zero. IS: =aE(RgF) AS: Am=sf+5