Which of the following events shifts the short-run aggregate supply curve to the right?
A)An increase in government spending on military equipment
B)A drop in oil prices
C)An increase in price expectations
D)None of the above is correct.

Question

Quizplus · Accepted Answer

A drop in oil prices would lead to a decrease in production costs for firms, resulting in a rightward shift of the short-run aggregate supply curve. Option A would shift the aggregate demand curve to the right, resulting in an increase in price and output, but would not have an impact on the aggregate supply curve. Option C would shift the short-run aggregate supply curve to the left, as higher price expectations lead to firms expecting higher costs and reducing their output accordingly. Option D is incorrect as there is at least one correct option available.

Which of the Following Events Shifts the Short-Run Aggregate Supply