Natural gas is used as a source of energy in many manufacturing processes. Assume large new deposits of natural gas are discovered in Nebraska, which increase the supply of natural gas and decreased the price of natural gas. This would cause
A) the short-run aggregate supply curve to shift to the right.
B) the short-run aggregate supply curve to become flatter.
C) the short-run aggregate supply curve to shift to the left.
D) the short-run aggregate supply curve to become nearly vertical at all levels of output.

Question

Quizplus · Accepted Answer

An increase in the supply of natural gas will decrease the cost of energy for manufacturers, making it cheaper for them to produce goods. This will shift the short-run aggregate supply curve to the right, as there will be lower costs of production, allowing for more output to be produced at any given price level.

Natural Gas Is Used as a Source of Energy in Many