Suppose That Speculators Expect That a War in the Middle

question 74

Essay

Suppose that speculators expect that a war in the Middle East is likely next year, which could cause a significant decrease in the supply of oil. a. What could the speculators do to profit from their expectation? b. What would be the possible impact of the war on the oil market without speculation? c. What would be the possible impact of the war on the oil market with the action taken by the speculators described in part a? d. How would the action taken by the speculators impact the society?

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Definitions:

Deductible Contribution

A contribution, typically to a retirement account, that can be subtracted from gross income to reduce taxable income.

Employer-sponsored Plans

Retirement or insurance plans offered to employees by their employer as a part of their benefits package.

Individual-based Plans

Retirement or savings plans that are established by individuals to save for retirement, distinct from employer-sponsored plans.

Retirement Plan Distributions

Payments made from a retirement plan, which may include pensions, 401(k)s, or IRA distributions, and can be taxable or tax-free, depending on the plan.