The diagram shows a shift in a country’s short-run aggregate supply curve from $SRA{S_1}$ to $SRA{S_2}$.
The country imports oil.
Why might an increase in the world price of oil have caused this shift?
1 )
A rise in inflation is expected.
2 )
Consumers face a fall in their disposable income.
Domestic firms’ costs have increased.
4 )
The government reduces tax on oil and petroleum products.
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