If There Is a Decrease in World Oil Prices and the Fed

question 2

Multiple Choice

If there is a decrease in world oil prices and the Fed wishes to maintain output stability,what should it do?

• A) Buy bonds in the open market.
• B) All the economy to adjust itself.
• C) Sell bonds in the open market.
• D) Impose higher taxes to counteract the supply shock.
• E) Lower taxes to maintain output.

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Definitions:

Operating Decisions

Definition: Decisions made by management related to the day-to-day operations of a company, including costs, production, and pricing strategies.

Strategic Level

A high-level perspective in organizational planning that focuses on long-term goals and overall direction of an organization.

Mixed Cost

Expenses that have both fixed and variable components, changing with the level of activity but not directly proportional.

Variable Costs

are expenses that change in proportion to the activity of a business, such as the cost of raw materials used in production.