-Refer to Figure 15-5.Assuming that the economy starts at point X,a decrease in world oil prices would
A) move the economy to point A
B) move the economy to point B
C) shift the aggregate supply curve upward to curve E
D) shift the aggregate supply curve downward to curve F
E) have no impact since the model only shows the relationship between the overall price level and real GDP.

Question

-Refer to Figure 15-5.Assuming that the economy starts at point X,a decrease in world oil prices would
A) move the economy to point A 
B) move the economy to point B 
C) shift the aggregate supply curve upward to curve E 
D) shift the aggregate supply curve downward to curve F 
E) have no impact since the model only shows the relationship between the overall price level and real GDP.

Quizplus · Accepted Answer

A decrease in world oil prices reduces production costs, leading to an increase in aggregate supply, which shifts the aggregate supply curve downward to curve F.