An increase in oil prices to a country that is a net importer of oil shifts
A)both the short- run aggregate supply and long- run aggregate supply curves leftward.
B)both the short- run aggregate supply and long- run aggregate supply curves rightward.
C)the long- run aggregate supply curve rightward, but leaves the short- run aggregate supply curve unchanged.
D)the short- run aggregate supply curve leftward, but shifts the long- run aggregate supply curve rightward.
E)the short- run aggregate supply curve leftward, but leaves the long- run aggregate supply curve unchanged.

Question

Quizplus · Accepted Answer

An increase in oil prices for a country that is a net importer of oil would increase production costs, leading to a decrease in the quantity of goods and services supplied at any given price level in the short run, shifting the short-run aggregate supply (SRAS) curve leftward. However, the long-run aggregate supply (LRAS) curve remains unchanged because it is determined by factors like technology, capital, and labor, which are not directly affected by oil prices in the long run.

An Increase in Oil Prices to a Country That Is