Refer to the Above Figure

question 355

Multiple Choice

Refer to the above figure. Assume that B is the current long-run aggregate supply (LRAS) curve and E is the current short-run aggregate supply (SRAS) curve. If a 90-day embargo of oil from the Middle East to the United States were announced, and if after that 90-day period oil prices were expected to return to normal pre-embargo prices, then you would expect

• A) the LRAS and the SRAS to remain at B and E, respectively.
• B) the LRAS to remain at B, but the SRAS to shift to D.
• C) the LRAS to remain at B, but the SRAS to shift to F.
• D) the LRAS to shift to C, and the SRAS to shift to F.

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Definitions:

Land Account

A type of asset account on a company's balance sheet that represents the cost of land owned by the company.

Expenditures

Outflows of money or other valuable assets that are paid or incurred as a result of acquiring goods or services.

Acquisition Cost

The total cost that a company recognizes for bringing an asset into its possession, including purchase price, installation charges, and other necessary expenditures.

Salvage Value

The anticipated salvage value assigned to an asset after its period of use concludes.