When the Nations That Constitute the Organization of the Petroleum

question 137

Multiple Choice

When the nations that constitute the Organization of the Petroleum Exporting Countries (OPEC) restrict the supply of oil to increase their profits,the oil market:

• A) achieves an efficient outcome because profits increase.
• B) achieves an equitable outcome because the nations with oil resources receive the profits commensurate with that resource.
• C) fails because there is no longer an efficient allocation of resources.
• D) fails because there is no longer an equitable allocation of resources.

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Definitions:

Leverage

The use of borrowed money to supplement existing funds for purposes of investment.

Bank Investments

Financial assets purchased or held by banks, including bonds, stocks, real estate, and other securities, with the aim of generating income or capital appreciation.

Leverage Ratio

The ratio of assets to bank capital.

Reserves

Assets held by a bank or financial institution, often to meet regulatory requirements or as a safeguard against potential crises.