If oil prices decrease,

Name: If oil prices decrease,
Brand: Quizplus
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Question

Quizplus · Accepted Answer

Decreasing oil prices will lead to a decrease in production costs, which will result in an increase in short-run aggregate supply. Therefore, the short-run aggregate supply curve will shift down. The long-run aggregate supply curve would not be affected by changes in oil prices as it represents the economy's potential output level in the long run, which is determined by technology, labor, and capital stock.

If Oil Prices Decrease