Other things being equal, a reorganization of the OPEC cartel to permit it to increase world oil prices by 70 percent would most likely have which effect?
A) It would shift the aggregate demand curve right.
B) It would shift the aggregate supply curve right.
C) It would shift the aggregate supply curve left.
D) It would shift the aggregate demand curve right and the aggregate supply curve left.

Question

Quizplus · Accepted Answer

An increase in oil prices raises production costs, reducing the quantity of goods and services that firms are willing to supply at any given price level, thus shifting the aggregate supply curve to the left.

Other Things Being Equal, a Reorganization of the OPEC Cartel