Figure 8-2
-In Figure 8-2,again assume that B is the current long-run aggregate supply curve (LRAS)and E is the current short-run aggregate supply curve (SRAS).If a 90 day embargo of oil from the Middle East to Canada were announced,and if after that 90 day period oil prices were expected to return to normal pre-embargo prices,then you would expect
A)the LRAS and the SRAS to remain at B and E,respectively.
B)the LRAS to remain at B,but the SRAS to shift to D.
C)the LRAS to remain at B,but the SRAS to shift to F.
D)the LRAS to shift to C,and the SRAS to shift to F.

Question

Figure 8-2 
-In Figure 8-2,again assume that B is the current long-run aggregate supply curve (LRAS)and E is the current short-run aggregate supply curve (SRAS).If a 90 day embargo of oil from the Middle East to Canada were announced,and if after that 90 day period oil prices were expected to return to normal pre-embargo prices,then you would expect
A)the LRAS and the SRAS to remain at B and E,respectively. 
B)the LRAS to remain at B,but the SRAS to shift to D. 
C)the LRAS to remain at B,but the SRAS to shift to F. 
D)the LRAS to shift to C,and the SRAS to shift to F.

Quizplus · Accepted Answer

The short-run aggregate supply (SRAS) curve would shift to F due to the temporary increase in oil prices, which would increase production costs and reduce the quantity of goods and services supplied at any given price level. The long-run aggregate supply (LRAS) curve would remain at B because the long-term productive capacity of the economy is not affected by temporary price shocks.

Figure 8-2 -In Figure 8-2,again Assume That B Is the Current Long-Run