A spike in oil prices caused by labor disputes would shift the:
A) aggregate demand curve, but not the aggregate supply curve.
B) aggregate demand curve and the short-run aggregate supply curve.
C) short-run aggregate supply curve only.
D) short-run and long-run aggregate supply curves.

Question

Quizplus · Accepted Answer

A spike in oil prices due to labor disputes primarily affects the cost of production, making it more expensive for companies to produce goods and services. This increase in production costs would lead to a decrease in the quantity of goods and services that firms are willing to supply at any given price level, shifting the short-run aggregate supply curve to the left. It does not directly affect aggregate demand.

A Spike in Oil Prices Caused by Labor Disputes Would