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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