The Discovery of a Significant New Source of Oil That

question 103

Multiple Choice

The discovery of a significant new source of oil that can be exported will shift the:

• A)supply of a currency to the right and lead to a currency depreciation.
• B)supply a currency to the right and lead to a currency appreciation.
• C)demand for a currency to the left and lead to a currency depreciation.
• D)demand for a currency to the right and lead to a currency appreciation.

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Definitions:

Supply Shocks

Unexpected events that suddenly change the supply of a good or service, potentially leading to rapid price changes.

Short-Run Phillips Curve

A curve that illustrates the inverse relationship between the rate of inflation and the unemployment rate in the short term, suggesting that lower unemployment comes with higher inflation.

Long-Run Phillips Curve

A concept suggesting that in the long term, there is no trade-off between inflation and unemployment, as opposed to the short-run Phillips curve.

Disinflation

A reduction in the rate of inflation, characterized by a slowing down in the rate at which prices increase over time.