Which of the following events shifts the short run aggregate supply curve to the right ?
Correct answer: B. a drop-in oil prices
- A. a decrease in the money supply
- B. a drop-in oil prices
- C. an increase in government spending on military equipment
- D. None of these answers
- E. an increase in price expectations
Explanation
Oil is an important input, so a fall in oil prices lowers firms’ production costs and shifts short-run aggregate supply to the right. The other listed changes either affect aggregate demand or raise production costs.
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The economy is studied as a whole through national income, gross domestic product, inflation, unemployment, economic growth and business cycles. Coverage includes aggregate demand and supply, consumption and investment, money and banking, fiscal and monetary policy, exchange rates and balance of payments, which distinguishes macroeconomics from the study of individual markets.
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