The Price of a Barrel of Oil Doubled Between 2007

question 56

Multiple Choice

The price of a barrel of oil doubled between 2007 and the middle of 2008.To make matters worse,a financial crisis hit the U.S.economy starting in August of 2007.Which of the following is true of the United Kingdom's experience?

• A) The increase in the price of oil immediately shifted the AS curve to the left.
• B) The financial crisis did not take hold right away so the AD curve did not immediately shift.
• C) Eventually, the Lehman Brothers bankruptcy caused a negative demand shock leading to a further fall in output and an increase in the unemployment rate.
• D) All of the above.
• E) None of the above.

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Definitions:

Guaranteed Contract

An agreement ensuring certain terms are fulfilled, often used in the context of employment contracts guaranteeing payment.

Rate of Return

The gain or loss of an investment over a specified period, expressed as a percentage of the investment's initial cost.

Compounded Monthly

Interest calculation method where interest is added to the principal sum at the end of each month, leading to interest on interest.

Balance

The amount of money currently in an account or owed on an account at any given time.