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Suppose that the economy is currently at potential output. Also suppose that you are an economic policy maker and that a college economics student asks you to rank, if possible, your most preferred to least preferred type of shock: positive demand shock, negative demand shock, positive supply shock, negative supply shock. How would you rank them and WHY in terms of the AS-AD Model?
Additionally describe an economic shock that has occurred in the last 120 years and the effect on the economy.
A shock has economy wide effects, so please do not confuse a failure in the tomato crop as a shock as it is not - such a failure would be an issue for basic supply and demand.
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