A temporary embargo on oil from Saudi Arabia going in to the United States would
A) shift both the short-run and long-run aggregate supply curves to the left.
B) shift only the long-run aggregate supply curve to the left.
C) shift the long-run aggregate supply curve to the right.
D) shift only the short-run aggregate supply curve to the left.

Question

Quizplus · Accepted Answer

A temporary embargo on oil from Saudi Arabia would primarily affect the short-run aggregate supply (SRAS) curve by shifting it to the left. This is because the immediate effect of an oil embargo would be to increase oil prices, leading to higher production costs for many goods and services in the economy. The long-run aggregate supply (LRAS) curve, which is determined by factors like technology, resources, and institutions, would not be directly affected by a temporary change in oil prices.

A Temporary Embargo on Oil from Saudi Arabia Going in to the United