A Temporary Supply Shock,such as a One Month Decrease in Oil

question 26

Multiple Choice

A temporary supply shock,such as a one month decrease in oil prices,would

• A)increase the marginal product of capital and increase desired investment, increasing the real interest rate in equilibrium.
• B)decrease the marginal product of capital and decrease desired investment, decreasing the real interest rate in equilibrium.
• C)have little or no effect on desired investment, thus not changing the real interest rate by much in equilibrium.
• D)increase both the marginal product of capital and the marginal product of labor in the long-term future, thus raising the real interest rate in equilibrium.

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Definitions:

Graduate Program

An advanced academic course of study that follows a bachelor's degree, typically culminating in a master's or doctoral degree.

Annual School Expenses

Yearly financial costs associated with education, including tuition, fees, books, and living expenses.

Opportunity Cost

Letting go of potential advantages from other choices when one is firmly selected.

Scenario 1-5

Hypothetical situations used for planning and analysis that represent a range, from optimistic to pessimistic forecasts.