If Rapid Increases in Oil Prices Caused Price Levels to Increase

question 144

Multiple Choice

If rapid increases in oil prices caused price levels to increase and real GDP to decrease in the short run,the economy would experience

• A)stagflation.
• B)long-run economic decline.
• C)hyperinflation.
• D)an increase in the natural rate of unemployment.

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Definitions:

Debt Ratio

A financial ratio that measures the proportion of a company's assets that are financed by debt.

Assets

Economic resources owned or controlled by an individual or entity that are expected to produce value or benefit in the future.

EBIT

Earnings Before Interest and Taxes, a measure of a firm's profit that includes all expenses except interest and income tax expenses.

Interest

The charge for borrowing money or the return on invested capital, typically expressed as an annual percentage rate.