Suppose OPEC Announces It Will Be Expanding the Production of Oil

question 125

Multiple Choice

Suppose OPEC announces it will be expanding the production of oil, decreasing its cost in the world market. How would this be represented in the AD/AS model?

• A) The long-run aggregate supply curve would shift to the left
• B) The long-run aggregate supply curve would shift to the right
• C) The short-run aggregate supply curve would shift to the left.
• D) The short-run aggregate supply curve would shift to the right.

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Definitions:

Significance Level

The probability of rejecting the null hypothesis in a statistical test when it is actually true, typically denoted by alpha (α), used as a threshold to gauge the strength of the evidence against the null hypothesis.

Test Statistic

A statistic calculated from sample data that is used in a hypothesis test to decide whether to reject the null hypothesis.

Sample Proportion

The ratio of members within a sample that possess a particular trait or characteristic, relative to the total sample size.

Null Hypothesis

The hypothesis that predicts no interaction or association between variables, serving as the benchmark for statistical testing.