Which Choice Explains How the OPEC Crisis of 1973 Affected

question 63

Multiple Choice

Which choice explains how the OPEC crisis of 1973 affected oil prices?

• A) The supply of oil was reduced, leading to a rise in oil prices.
• B) The supply of oil was increased, leading to a fall in oil prices.
• C) The demand for oil increased, leading to a rise in oil prices.
• D) The demand for oil decreased, leading to a fall in oil prices.

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Definitions:

Real Exchange Rate

A measure that compares the relative price of a basket of goods in two different currencies, adjusted for inflation.

Surplus

The amount by which the quantity of a product or service available exceeds the quantity demanded at the current price.

Shortage

A situation in which quantity demanded is greater than quantity supplied.

Purchasing-Power Parity

An economic theory that compares different countries' currencies through a "basket of goods" approach, suggesting that exchange rates should adjust so that identical goods cost the same in different countries.