ECONOMICS
AGGREGATE DEMAND
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Aggregate Supply
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Aggregate Demand
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Either A or B
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None of the above
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Detailed explanation-1: -Answer and Explanation: An increase in oil prices will shift the aggregate c. supply curve leftward.
Detailed explanation-2: -OIL PRICE EFFECTS The first is through its effect on aggregate supply; this has, come to be called a “price shock.” In this view, an oil price increase results in an initial upward shift in the aggre-gate supply curve that will raise prices; output falls along a downward-sloping aggregate demand curve.
Detailed explanation-3: -The answer is: C. An increase in oil prices will shift the aggregate supply curve leftward.
Detailed explanation-4: -Falling oil prices often affect activity and inflation by shifting aggregate demand and supply and triggering policy responses. On the supply side, lower oil prices lead to a decline in the cost of production.
Detailed explanation-5: -Since modern economists calculate aggregate demand using a specific formula, shifts result from changes in the value of the formula’s input variables: consumer spending, investment spending, government spending, exports, and imports.