Higher world oil prices
A) shift both SAS and LAS leftward.
B) shift SAS leftward only.
C) shift both SAS and LAS rightward.
D) shift SAS rightward only.
E) increase aggregate quantity supplied.

Question

Quizplus · Accepted Answer

Higher world oil prices increase the cost of production for many goods and services, leading to a leftward shift in the Short-Run Aggregate Supply (SAS) curve as producers reduce output at existing price levels. This does not directly affect the Long-Run Aggregate Supply (LAS), which is determined by factors like technology, resources, and labor supply, and is assumed to be unaffected by short-term price changes.

Higher World Oil Prices