A higher price for oil shifts the
A) LAS curve leftward.
B) SAS curve rightward.
C) AD curve rightward.
D) SAS curve leftward.

Question

Quizplus · Accepted Answer

A higher price for oil will increase the costs of production for businesses that use oil, such as transportation and manufacturing companies. As a result, the SAS curve (short-run aggregate supply) will shift leftward since businesses will be willing to supply less output at every price level. This will lead to higher prices and lower output in the short run.

A Higher Price for Oil Shifts the