A short-lived increase in oil prices caused by destruction of oil-producing and oil-refining facilities by a large hurricane will
A) shift the SRAS curve to the right.
B) shift the LRAS curve to the right.
C) shift the SRAS curve to the left.
D) shift the AD curve to the right.

Question

Quizplus · Accepted Answer

This scenario would cause a temporary decrease in the supply of oil, leading to a leftward shift of the short-run aggregate supply (SRAS) curve. This would result in higher prices and lower output levels in the short run, but the long-run aggregate supply (LRAS) curve should eventually return the economy to its equilibrium level of output. The AD curve should not be affected, as there is no change in the level of demand for goods and services in the economy.

A Short-Lived Increase in Oil Prices Caused by Destruction of Oil-Producing