The following events have occured at times in the history of the United States.

*A deep recession hits the world economy.
*The world oil price rises sharply.
*U.S. business expect future profits to fall.

a. Explain for each event whether it changes short-run aggregate supply, long-run aggregate supply, aggregate demand, or some combination of them.

b. Explain the separate effects of each event on U.S. real GDP and the price level, starting from a position of long-run equilibrium.

c. Explain the combined effects of these events on U.S. real GDP and the price level, starting from a position of long-run equilibrium.

d. Describe what a classical macroeconomist, a Keynesian, and a monetarist would want to do in response to each of the above events.