Economics (AS & A Level) · May / June 2022 · Paper 12 · Question 27
9708Aggregate Demand and Aggregate Supply analysis
The diagram shows a shift in a country's short-run aggregate supply curve from SRAS₁ to SRAS₂. The country imports oil. Why might an increase in the world price of oil have caused this shift?
- AA rise in inflation is expected.
- BConsumers face a fall in their disposable income.
- CDomestic firms' costs have increased.
- DThe government reduces tax on oil and petroleum products.
As printed in the paper
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Correct answer: C. Domestic firms' costs have increased.
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