Using the AS- AD Diagram, Show the Effects of an Increase

question 13

Essay

Using the AS- AD diagram, show the effects of an increase in the price of oil in the short run.

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Definitions:

Proportional Tax

A tax system where the rate of taxation is the same for all taxpayers, regardless of income or wealth.

Payroll Tax

Duties levied on both employers and employees, usually reflecting a portion of the payroll expenses.

Per-hour Wage

The sum of money an employee receives for working one hour.

Payroll Tax

Fees assessed on employers and their employees, calculated frequently as a fraction of the salaries employees earn.