Which of the following shifts the aggregate supply curve?
A) an increase in the price of oil
B) a change in the previous period's inflation rate
C) higher taxes on firms
D) All of these answers are correct.
E) None of these answers is correct.

Question

Quizplus · Accepted Answer

All the given options affect the production costs or the cost of doing business for firms, which in turn shifts the aggregate supply curve. An increase in the price of oil increases the input costs for production, thus shifting the aggregate supply curve to the left. A change in the previous period's inflation rate affects the expectations of firms regarding future prices and costs, which impacts their supply decisions. Higher taxes on firms increase the cost of production and reduce profits, making firms less likely to supply at any given price level, causing a leftward shift in the aggregate supply curve.

Which of the Following Shifts the Aggregate Supply Curve