Q1. Two major factors can cause a rise in crude oil prices in the global market. These include a rise in global demand, especially from China; as well as cost shocks, such as the Iraq war or Hurricane Katrina (in 2005). Inflation rates in countries are generally raised by such price increases. Answer the following questions. 1a. What type of inflation would be triggered by an increase in oil prices, and give a brief description about the factors that would trigger such inflation? Provide two past real-life examples when such an inflation was witnessed. 1b. Explain the aggregate demand-aggregate supply (AD-AS) model in the context of the events. Describe and include the type of unemployment caused in any economy that is heavily dependent on oil import in your response.

Q2. Take a look at this excerpt from the news, "India is one of the largest importers of oil in the world. It imports nearly 80% of its total oil requirements. This accounts for one- third of the country's overall imports. As a result, the price of oil has a major impact on India, according to a report by Livemint." Consider the scenario of low oil prices. What are the effects of falling oil prices on fiscal balance? Mention two fiscal tools adopted by the government in such a scenario. Q3. A large increase in inflation causes a drop in the overall output of any economy, which is referred to as a 'short-term recessionary phase'. It is not a desired phenomenon by any government in the world. Describe two resources that the Reserve Bank of India (RBI) can adopt to help the country recover from such a short run recession phase in the country.

Q4. The pound sterling depreciated after the Brexit referendum in June 2016, resulting in significant impacts on trade flows between the United Kingdom and the European Union. The currency depreciation lowers the purchasing power and has an impact on imports and exports. Mention two advantages and two disadvantages of the depreciated pound on the British economy.