ECONOMICS
AGGREGATE SUPPLY
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Cause an increase in AD
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Cause AS to contract
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Cause AS to shift to the left
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Cause AS to shift to the right
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Detailed explanation-1: -On the other hand, a decline in the price of a key input like oil will shift the SRAS curve to the right, providing an incentive for more to be produced at every given price level for outputs.
Detailed explanation-2: -If oil prices fall, production and transportation costs fall, so more can be produced at a given price. Demand then increases or decreases in response to the supply fluctuations.
Detailed explanation-3: -Rise in crude oil prices can be worrisome for markets and investors. It means higher transport costs of goods and a rise in input costs for most industries. When the price of oil rises, it can propel inflation, and to tame it, central banks across the globe may hike key rates, making borrowing an expensive proposition.
Detailed explanation-4: -Supply and Demand Curves Where the two curves intersect is the price and quantity, based on current levels of supply and demand. A positive change in supply when demand is constant shifts the supply curve to the right, which results in an intersection that yields lower prices and higher quantity.
Detailed explanation-5: -The curve shifts to the right if the determinant causes demand to increase. This means more of the good or service are demanded even though there’s no change in price. When the economy is booming, buyers’ incomes will rise. They’ll buy more of everything, even though the price hasn’t changed.