Respuesta :
Assuming that OPEC reduces oil production, which raises oil prices, short run aggregate supply (SRAS) will also move inwards.
How Oil Prices affect Short Run Aggregate Supply?
- Many producers, including the largest power firms and transportation logistics companies, will see an increase in import expenses as a result of a rise in the price of crude.
- This increase in oil prices will cause a shift in supply toward domestic markets in many industries.
- Short run aggregate supply (SRAS) will consequently move inwards as a result. SRAS is based on the supposition that variables like the technological state of the art remain constant.
- This indicates a decrease in the nation's output of products and services across all price ranges.
- Cost-push inflation will likely cause prices to increase as a result, which will cause real GDP to decline and cause a slowdown or potential economic recession.
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