Your fund, Duck Capital, specializes in real estate investment.

You raise $500M, you deposit all of it in your account with Gold- man Sachs - in other words, your investment portfolio is completely liquid. Through some private information sources, you know that in a month the United States will be hit with positive oil price shocks (oil prices will spike due to exogenous causes). You also know that the Federal Reserve is cur- rently very concerned with inflation, and wants to maintain the inflation rate at the current level at all costs. Based on all of the above, should you starting investing in real estate now, or should you wait until after the oil price shock? Explain and use as many graphs as you can - the more the better. Hint: How will the oil price shock and subsequent monetary policy shock affect asset prices?

Really need help in how oil price shocks, in this case positive, affect inflation, and whether I should invest before or after? I was assuming it was before considering that oil stems into most industries and households use lots of gas so they would increase in worth? Some clarification would be great