How Do Changes in the Price of Oil Affect Economies

question 207

Multiple Choice

How do changes in the price of oil affect economies?

• A)They lead to recession and deflation
• B)They do not contribute much to output fluctuations.
• C)They change the economy principally by changing aggregate demand.
• D)They may create both inflation and recession.

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Definitions:

Complements

Goods and services that are used together, where the consumption or use of one increases the demand for the other.

Normal Goods

Goods for which demand increases as consumer income rises, holding prices constant.

Steak

A cut of meat, typically beef, that is sliced perpendicular to the muscle fibers.

Price-Consumption Curves

Graphical lines that show how a consumer's optimal bundle of goods changes as the price of one good changes, holding everything else constant.