The figure given below represents the long-run equilibrium in the aggregate demand and aggregate supply model.
Figure 8.2

-Refer to Figure 8.2. Suppose major oil-exporting countries restrict oil output, thus increasing the price of oil. This would be represented by:
A) a movement from A to C.
B) a movement from A to B to C.
C) a movement from B to C.
D) a movement from B to A.
E) a movement from C to A.

Question

The figure given below represents the long-run equilibrium in the aggregate demand and aggregate supply model.
Figure 8.2
 
-Refer to Figure 8.2. Suppose major oil-exporting countries restrict oil output, thus increasing the price of oil. This would be represented by:
A) a movement from A to C. 
B) a movement from A to B to C. 
C) a movement from B to C. 
D) a movement from B to A. 
E) a movement from C to A.

Quizplus · Accepted Answer

The correct answer is A because a restriction in oil output would lead to a decrease in supply, which would shift the supply curve to the left, resulting in a movement from A to C.

The Figure Given Below Represents the Long-Run Equilibrium in the Aggregate