Macro SRAS Question

[bhhewitt]

Which of the following events is least likely to cause a decrease in short-run aggregate supply?

A)
Oil exporting countries reduce their production levels.

B)
A labor stoppage causes the price of steel to rise.

C)
Inflation increases from 4% to 7%.

The answer is C with explanation: Changes in the price level represent movement along the short-run aggregate supply curve. The other items listed are events that are likely to shift the short-run aggregate supply curve to the left (decrease SRAS).

What are they looking for? A shift in the SRAS or a move along the SRAS (left)? Also, which answer will do what (shift or move along curve)? Thanks in advance!

 

[Harrogath]

This is a very tricky question. If you are aware that options A and B increase the SRAS, you would choose C even the case when you dont know that C) does not increase nor decrease SRAS, you stay on the same SRAS.

 

[bhhewitt]

Thanks Harrogath! And yes, after staring at Econ questions for so many hours, I start to question my own sanity.

 

[olajideanuoluwa001]

Inflation is a average change in price level, and if you look at the demand & supply curve properties, on;ly a change in price will cause a movement along the supply surve, any other thing that has nothing to do with price, then it will cause a shift.

 

[Harrogath]

olajideanuoluwa001 wrote:
Inflation is a average change in price level, and if you look at the demand & supply curve properties, on;ly a change in price will cause a movement along the supply surve, any other thing that has nothing to do with price, then it will cause a shift.

Exactly !