Oil price hikes
A)increase aggregate supply.
B)decrease aggregate supply.
C)increase aggregate demand.
D)decrease aggregate demand.
E)increase potential GDP.

Question

Quizplus · Accepted Answer

Oil price hikes lead to increased production costs for businesses, resulting in a decrease in aggregate supply of goods and services. This is because businesses experience lower profit margins and may reduce production levels or pass on increased costs to consumers through higher prices, leading to a decrease in supply.

Oil Price Hikes