A decrease in the price of oil will shift the:
A) short-run aggregate supply curve to the right.
B) aggregate demand curve to the right.
C) short-run aggregate supply curve to the left.
D) long-run aggregate supply curve to the left.

Question

Quizplus · Accepted Answer

A decrease in the price of oil will lower production costs for firms, causing them to increase output and shift the short-run aggregate supply curve to the right. This is because the lower price of oil reduces the cost of production for firms and allows them to produce more output at a given price level.

A Decrease in the Price of Oil Will Shift The