Extract D states: ‘...a prolonged geopolitical crisis in energy-exporting regions has led to a tripling of wholesale natural gas prices and electricity tariffs for heavy industries... forcing domestic manufacturers to face soaring operating costs, leading many to scale back production and raise wholesale prices across the board...’
Draw an AD/AS diagram to show how this surge in industrial energy costs is likely to affect the macroeconomy.
222 exam-style questions on AQA A Level Economics 2.2 How the macroeconomy works: the circular flow of income, aggregate demand/aggregate supply analysis and related concepts, covering 2.2.1 The circular flow of income, 2.2.2 Aggregate demand and aggregate supply analysis, 2.2.3 The determinants of aggregate demand, 2.2.4 Aggregate demand and the level of economic activity, 2.2.5 Determinants of short-run aggregate supply, and 2.2.6 Determinants of long-run aggregate supply. Each one has a worked solution and a mark scheme showing where the marks go.