Recall the Application About Oil Price Fluctuations in the U

question 40

Multiple Choice

Recall the Application about oil price fluctuations in the U.S. economy to answer the following
question(s) . During the 1970s, the world economy was hit with a series of supply shocks which impacted
the prices of oil and many agricultural commodities. Since the United States is a net importer of oil, the
changes in oil prices also had an impact on aggregate demand. During the 1990s, the world economy
experienced favorable supply shocks in the oil market, but in 2008, world oil prices skyrocketed to $145 a
barrel before falling again in 2009 and 2010.
-According to this Application, because the United States is a net importer of foreign oil, an increase in oil prices is like an)

• A)tax that decreases U.S. consumersʹ income.
• B)decrease in U.S. interest rates.
• C)increase in the U.S. supply of money.
• D)beneficial supply shock for the U.S. consumer.

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Definitions:

Direct Labor Rate Variance

The difference between the actual rate and the standard rate paid for direct labor multiplied by the actual direct labor hours used in producing a product.

Direct Labor

The wages paid to workers who are directly involved in the production of goods or services.

Direct Labor Rate Variance

The difference between the expected cost of direct labor per unit of production and the actual cost incurred.

Direct Labor

Direct labor refers to the wages and other costs for employees who are directly involved in the production of goods or services.