Because oil price increases reduce the consumption of oil, this discourages exploration for new sources of oil

Distinguish the short run from the long run. Generally, what causes costs of production to vary with output in the short run? What generally causes costs of production to vary in the long run?

Suppose the central bank pursues an unexpectedly tight monetary policy. In the short-run the effects of this are shown by

a. moving to the left along the short-run Phillips curve. b. moving to the right along the short-run Phillips curve. c. shifting the short-run Phillips curve to the right. d. shifting the short-run Phillips curve to the left.