An increase in oil prices will shift the aggregate:
A) demand curve leftward.
B) demand curve rightward.
C) supply curve leftward.
D) supply curve rightward.

Question

Quizplus · Accepted Answer

An increase in oil prices will increase the cost of production for firms, leading to a decrease in supply as firms produce less at any given price. Thus, the supply curve will shift leftward. It would not affect demand directly, so the demand curve would not shift.

An Increase in Oil Prices Will Shift the Aggregate