Suppose there is a temporary increase in the price of oil. This is represented by
A) a leftward shift of the SAS and the LAS curve.
B) a leftward shift of the LAS curve.
C) a rightward shift of the SAS curve.
D) a leftward shift of the SAS curve.

Question

Quizplus · Accepted Answer

A temporary increase in the price of oil would cause a leftward shift of the Short-Run Aggregate Supply (SAS) curve due to increased production costs, without affecting the Long-Run Aggregate Supply (LAS) curve, which is based on factors like technology and resources rather than short-term price changes.

Suppose There Is a Temporary Increase in the Price of Oil