A crisis in the Middle East drastically raises the price of petroleum.If the aggregate demand curve does not shift,then aggregate supply will ________,real GDP will ________,and the price level will ________.
A)increase;remain the same;increase
B)decrease;decrease;increase
C)increase;increase;increase
D)remain the same;increase;increase
E)decrease;remain the same;decrease

Question

Quizplus · Accepted Answer

A crisis in the Middle East that raises petroleum prices increases production costs, causing the aggregate supply to decrease. This leads to a decrease in real GDP and an increase in the price level, as higher costs reduce output and raise prices.

A Crisis in the Middle East Drastically Raises the Price