Aggregate supply represents the total output

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Question: The fracking boom, driven by hydraulic fracturing, markedly boosted domestic oil and natural gas production in the US throughout the 2000s. This technological leap led to a rapid surge in energy supply, especially in natural gas production. By 2015, natural gas had surpassed coal as the leading source of electricity generation in the US. However, the fracking industry also produces wastewater containing salts, metals, and radioactive elements, presenting environmental challenges. The Covid-19 pandemic significantly impacted the fracking industry. Lockdowns and reduced economic activity caused a sharp drop in energy demand, which in turn affected oil and gas prices. Fracking operations faced logistical issues due to disruptions in supply chains and workforce availability. Many fracking companies encountered financial difficulties, resulting in production cutbacks and well closures. Consequently, the fracking industry faced a dual challenge of decreased demand and operational difficulties. The AS-AD model illustrates the relationship between aggregate supply (AS) and aggregate demand (AD) in an economy. Aggregate Supply (AS) represents the total output (goods and services) that firms are willing to produce at different price levels. In the context of fracking, an increase in energy supply due to fracking shifts the AS curve to the right. Aggregate Demand (AD) represents

Reference no: EM133711178

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