The Price of a Barrel of Oil Doubled Between 2007

question 61

Multiple Choice

The price of a barrel of oil doubled between 2007 and the middle of 2008. To make matters worse,a financial crisis hit the U.S. economy starting in August of 2007. Which of the following is an appropriate description of the mechanism that would have ensued?

• A)The increase in the price of oil would have immediately shifted the AS curve to the right.
• B)The financial crisis would have led to a sharp contraction in spending shifting the AD curve to the right.
• C)Shifts in both the AD and the AS curve would have ensued in the short-run but as long as neither shock had an impact on potential output,ultimately unemployment will have been unaffected in the long run.
• D)All of the above.
• E)None of the above.

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Definitions:

Inner Hair Cells

Cells located in the cochlea of the inner ear that convert sound vibrations into electrical signals sent to the brain.

Tonotopic Map

An arrangement in the auditory system where different frequencies of sound are systematically mapped to specific locations.

Cochlea

A spiral-shaped cavity of the inner ear, essential for converting sound into nerve impulses.

Primary Auditory Cortex

The region of the brain that is directly responsible for the processing of auditory information.