Question

What impact did the soaring oil prices of 2007 and the first half of 2008 have...

What impact did the soaring oil prices of 2007 and the first half of 2008 have on the economy? a. They increased SRAS, causing real output and employment to increase. b. They reduced SRAS, causing real output and employment to increase. c. They increased SRAS, causing real output and employment to decline. d. They reduced SRAS, causing real output and employment to decline.

Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Correct answer is: d. They reduced SRAS, causing real output and employment to decline.

Explanation: Oil is used in production processes. It is an important input in production. So, soaring oil prices increased the cost of production in the economy. As production becomes expensive, supply in the economy decreases. So, aggregate supply declines in the short run thereby shifting SRAS leftward. So, real output in the economy declines and thereby employment also decreases.

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
1. Between 2007 and 2008 investment declined from an annual rate of $2160 billion to $1930...
1. Between 2007 and 2008 investment declined from an annual rate of $2160 billion to $1930 billion as the U.S. economy found itself in yet another recession. As a result of the recession, the unemployment rate grew to 9.3 % by 2009.  Assume MPC= .75 a) How did the decline in investment between 2007 and 2008 affect Aggregate Demand (AD)?  Show or explain your work.    (5 pts) b) Assume the AD shortfall in 2009 was $1240 billion. As an economic adviser to...
International Finance Imagine that oil prices have recently dropped to $48 per barrel. Suppose you are...
International Finance Imagine that oil prices have recently dropped to $48 per barrel. Suppose you are a member of the monetary policy committee of a small open economy, dependent on oil exports, which also wants to maintain a currency peg to the dollar. (a) Describe the pressures (in the form of appreciation or depreciation) that the domestic currency would face due to the decrease in oil prices. (Hint: Think about the effects of the lower oil prices−export prices−on the current...
1. The aggregate supply curve indicates the: a. relationship between prices and the level of investment...
1. The aggregate supply curve indicates the: a. relationship between prices and the level of investment spending. b. quantity of goods and services producers will supply at different price levels. c. relationship between prices and the aggregate quantity of goods and services purchased by consumers, investors, governments, and foreigners (net exports). d. relationship between the real wage rate and the quantity of labor supplied by households. 2. How will an increase in the world price of crude oil influence the...
(a) Oil prices have fallen by about a third since December of last year. Is this...
(a) Oil prices have fallen by about a third since December of last year. Is this a positive or a negative aggregate supply shock for China, a net importer of oil? Use the labor market and the production function to predict the effects of lower oil prices on employment, output, and the real wage in China. (b) Because of a decrease in the working-age population, Chinese labor force is now shrinking (The Economist, Feb 23, 2019). How does this change...
When an economy operates at its long-run potential output level, a. aggregate demand will exceed aggregate...
When an economy operates at its long-run potential output level, a. aggregate demand will exceed aggregate supply in the goods and services market. b. unemployment will decline to an abnormally low rate that cannot be sustained in the long run. c. the actual rate of unemployment will exceed the natural rate of unemployment. d. the natural and actual rates of unemployment will be equal. If an economy is operating in the range where its aggregate supply curve is vertical, a....
Other things equal, what effect will each of the following changes independently have on the equilibrium...
Other things equal, what effect will each of the following changes independently have on the equilibrium level of real GDP in the private closed economy? a. A decline in the real interest rate. b. An overall decrease in the expected rate of return on investment. c. A sizable, sustained increase in stock prices.
2008 2007 Sample Size 36 36 Sample Mean 75.1944 69.4167 Sample Standard Deviation 15.0177 7.3149 df...
2008 2007 Sample Size 36 36 Sample Mean 75.1944 69.4167 Sample Standard Deviation 15.0177 7.3149 df 50 Confidence Interval (in terms of 2008 - 2007) Confidence Coefficient 0.80 Lower Limit 2.1621 Upper Limit 9.3935 Hypothesis Test (in terms of 2008 - 2007) Hypothesized Value 0 Test Statistic p-value (Lower Tail) p-value (Upper Tail) p-value (Two Tail) 2008-2007 Sample Size 36 Sample Mean 5.7778 Sample Standard Deviation 18.2790 Confidence Interval (in terms of 2008 - 2007) Confidence Coefficient 0.80 Lower Limit...
2008 2007 Sample Size 36 36 Sample Mean 75.1944 69.4167 Sample Standard Deviation 15.0177 7.3149 df...
2008 2007 Sample Size 36 36 Sample Mean 75.1944 69.4167 Sample Standard Deviation 15.0177 7.3149 df 50 Confidence Interval (in terms of 2008 - 2007) Confidence Coefficient 0.80 Lower Limit 2.1621 Upper Limit 9.3935 Hypothesis Test (in terms of 2008 - 2007) Hypothesized Value 0 Test Statistic p-value (Lower Tail) p-value (Upper Tail) p-value (Two Tail) 2008-2007 Sample Size 36 Sample Mean 5.7778 Sample Standard Deviation 18.2790 Confidence Interval (in terms of 2008 - 2007) Confidence Coefficient 0.80 Lower Limit...
2008 2007 Sample Size 36 36 Sample Mean 77.8889 69.6111 Sample Standard Deviation 14.1154 6.9004 df...
2008 2007 Sample Size 36 36 Sample Mean 77.8889 69.6111 Sample Standard Deviation 14.1154 6.9004 df 50 Confidence Interval (in terms of 2008 - 2007) Confidence Coefficient 0.80 Lower Limit 4.8769 Upper Limit 11.6786 Hypothesis Test (in terms of 2008 - 2007) Hypothesized Value 0 Test Statistic p-value (Lower Tail) p-value (Upper Tail) p-value (Two Tail) 2008-2007 Sample Size 36 Sample Mean 8.2778 Sample Standard Deviation 17.1591 Confidence Interval (in terms of 2008 - 2007) Confidence Coefficient 0.80 Lower Limit...
A real Keynesian model of a mixed economy with a marginal propensity to consume equal to...
A real Keynesian model of a mixed economy with a marginal propensity to consume equal to .9 produces an equilibrium level of $2400 billion that is $600 billion below a full employment level of output. A) What change in government spending would bring about full employment? Be sure to calculate the government spending multiplier. B) The resulting increase in real output have driven up real interests rates from 3% to 4% and those higher real interest rates reduced investment by...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT