Which of the following would cause a decrease (leftward shift) in the short-run aggregate supply curve (SRAS)?
A) an increase in oil prices
B) an advance in technology
C) an increase in the CPI
D) an increase in the long-run aggregate supply curve (LRAS)

Question

Quizplus · Accepted Answer

An increase in oil prices would cause a decrease (leftward shift) in the short-run aggregate supply curve (SRAS) because it would lead to an increase in production costs, which would reduce the profitability of production and decrease the willingness of firms to supply goods and services at any given price level. This would result in a decrease in the quantity supplied, shifting the SRAS curve leftward.

Which of the Following Would Cause a Decrease (Leftward Shift)