Suppose the Organization of Petroleum Exporting Countries (OPEC) Sharply Increased

question 39

Multiple Choice

Suppose the Organization of Petroleum Exporting Countries (OPEC) sharply increased the price of oil, which triggered higher inflation rates in the United States. This type of inflation is best classified as:

• A) pseudo-inflation.
• B) demand-pull inflation.
• C) cost-push inflation.
• D) hyperinflation.

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Definitions:

Equipment

Tangible assets used in operations, such as machinery or office machines, which have a useful life longer than a year.

Straight-Line Method

A depreciation method that allocates an equal amount of the cost of an asset to each year of its useful life.

Fully Depreciated

A term used when a fixed asset has been depreciated to its salvage value and no longer carries a cost on the balance sheet except its possible residual value.

Loss on Disposal

Represents the financial loss a company incurs when it disposes of an asset for less than its carrying value.