Suppose there is a decrease in the availability of an important major resource, such as oil. Which of the following shifts would most likely occur?
A)The aggregate supply would shift right.
B)The aggregate supply would shift left.
C)The aggregate demand would shift right.
D)The aggregate demand would shift left.

Question

Quizplus · Accepted Answer

A decrease in the availability of an important major resource will cause a decrease in the production capacity of firms, which will shift the aggregate supply curve leftward. This will cause a decrease in real GDP and an increase in the price level. There will be no direct effect on aggregate demand.

Suppose There Is a Decrease in the Availability of an Important