Which of the Following Best Describes the Effect on the Aggregate

question 26

Multiple Choice

Which of the following best describes the effect on the aggregate supply curve if political negotiations result in a substantial decrease in the price of oil?

• A)The AS curve shifts rightward.
• B)There is no change to the AS curve.
• C)The AS curve does not shift but there is an upward movement along it.
• D)The AS curve does not shift but there is a downward movement along it.
• E)The AS curve shifts leftward.

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Definitions:

Elasticity

A measure in economics of how much the quantity demanded or supplied of a good changes in response to changes in its price or other factors.

Substitutes Available

Products or services that can be used in place of one another, providing consumers with choices in the marketplace.

Elastic

Describes a situation in which the quantity demanded or supplied changes significantly in response to a change in price.

Demand

The desire of consumers, backed by the ability and readiness to purchase, for specific goods or services at a given time.