Which of the following best describes the effect on the aggregate supply curve if political negotiations result in a substantial decrease in the price of oil?
A)The AS curve shifts rightward.
B)There is no change to the AS curve.
C)The AS curve does not shift but there is an upward movement along it.
D)The AS curve does not shift but there is a downward movement along it.
E)The AS curve shifts leftward.

Question

Quizplus · Accepted Answer

A decrease in the price of oil will lower production costs for firms that use oil as an input, such as those in transportation or manufacturing. This will lead to an increase in the quantity of goods and services supplied, causing the aggregate supply curve to shift rightward.

Which of the Following Best Describes the Effect on the Aggregate