Final answer:
A rapid increase in the price of oil will cause the short-run aggregate supply to shift to the left, depicting higher production costs and leading to a higher general price level and lower output in the short run.option d is correct answer.
Step-by-step explanation:
The question pertains to how a rapid increase in the price of oil affects the aggregate supply and demand in an economy. When the price of oil rises sharply, it increases the costs for businesses that use oil as an input in production. This leads to increased production costs for numerous goods and services, which can subsequently cause businesses to produce less.
The correct answer is that a rapid increase in the price of oil will tend to shift the short-run aggregate supply (SRAS) to the left.Answer option (d) - 'shift shortrun aggregate supply to the left' - is correct because higher production costs due to more expensive oil means that at each possible price level of outputs, a smaller quantity of goods and services will be produced.
This is depicted as a leftward shift of the SRAS curve, leading to a higher general price level (inflation) and lower output in the short run, which is a phenomenon known as cost-push inflation.