When there is a temporary sharp increase in the price of oil,which curves will shift left?
A)both SRAS and LRAS
B)SRAS
C)LRAS
D)neither SRAS nor LRAS

Question

Quizplus · Accepted Answer

A temporary sharp increase in the price of oil will cause an increase in production costs for firms, which will cause a leftward shift in the SRAS (Short-Run Aggregate Supply) curve. However, it will not affect the LRAS (Long-Run Aggregate Supply) curve, as this curve is determined by factors such as technology, capital, and labor. Thus, the correct choice is B) SRAS.

When There Is a Temporary Sharp Increase in the Price