Question

When increasing oil prices cause aggregate supply to shift to the left, then:

a. unemployment and inflation decrease.
b. unemployment decreases and inflation increases.
c. unemployment and inflation increase.
d. unemployment increases and inflation decreases.

Answer 1

When increasing oil prices cause aggregate supply to shift to the left, then unemployment and inflation increase

Option C

Step-by-step explanation:

In economics, the overall supply of money and products that companies in a global economy intend to sell for a specified period is aggregate supply (AS) either domestic production.

The total quantity of products and services are the sum that people are willing and happy to sell in a market at a certain price level.

With the cost of key inputs rising, the description supply curve changes to the left making it much easier to merge lower capacity when increased unemployment and increased inflation.