Question 3) This question focuses on the 1970s oil crisis. During the 1970s, developed economies around the world (Australia included) were brought to their knees by a severe oil crisis. In October 1973, oil exporting countries, led by Saudi Arabia, announced a global oil embargo. Oil price soon skyrocketed, surging from $3 per barrel to almost $12 per barrel. The dramatic increase in oil price continued throughout the 1970s, with price reaching $40 per barrel in 1979. Given how critical oil and other types of fuel were as inputs to production, this crisis heaped crippling impacts on major economies around the world. Required: a. Clearly explain how the shock above (i.e., the oil crisis) would affect aggregate demand and aggregate supply (both short-run and long-run) in the Australian economy. b. Draw an appropriate AD - AS graph to illustrate the impacts of this shock. Assume that the Australian economy was originally at the long-run equilibrium. c. State clearly the impacts of this shock on the key macroeconomic variables (i.e., Price level, Real GDP & the Unemployment rate). What type of inflation would occur as a result of this shock