Which of the following would cause a decrease (leftward shift) in the short-run aggregate supply curve (SRAS)?
A) An increase in oil prices.
B) An advance in technology.
C) An increase in the CPI.
D) An increase in the long-run aggregate supply curve (LRAS).

Question

Quizplus · Accepted Answer

An increase in oil prices would cause a decrease in the short-run aggregate supply curve because it increases the cost of production for businesses, leading to a decrease in the amount of output they can produce at any given price level. This is known as cost-push inflation. Advanced technology or an increase in the long-run aggregate supply curve would shift the curve rightward, indicating an increase in potential output. An increase in the CPI would not directly affect the short-run aggregate supply curve but would affect the aggregate demand curve.

Which of the Following Would Cause a Decrease (Leftward Shift)