An increase in the availability of an important major resource such as oil shifts the:
a) aggregate-supply curve to the left.
b) aggregate-demand curve to the left.
c) aggregate-supply curve to the right.
d) aggregate-demand curve to the right.
Ans: c) aggregate-supply curve to the right.
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A country reports that its actual real GDP is greater than its potential GDP. It must be that
A) more workers decided to quit work in order to enjoy leisure time. B) the excess by which real GDP exceeds potential GDP is only temporary, and eventually real GDP will decrease to be equal to potential GDP. C) the price level is increasing. D) an error was made when calculating actual real GDP. E) None of the above answers is correct because it is impossible for a country's real GDP to exceed its potential GDP.
When oranges increase in price, the income effect
A) decreases the consumption of oranges only if oranges are a normal good. B) decreases the consumption of oranges only if oranges are an inferior good. C) always increases the consumption of oranges. D) always decreases the consumption of oranges.