Suppose There Is a Sharp Decline in Oil Prices

question 43

Multiple Choice

Suppose there is a sharp decline in oil prices. According to the theory of economic fluctuations,

• A)real GDP will fall.
• B)real GDP will not change.
• C)its effect on real GDP is uncertain.
• D)real GDP will increase.
• E)potential GDP will fall.

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Definitions:

Supply Curve

A graphical representation showing the relationship between the quantity of a good supplied and its price.

Quantity Supplied

The total amount of a good or service that producers are willing and able to sell at a given price level in a market.

Increase in Supply

A situation where the quantity of a good or service that producers are willing to sell at a given price rises.

Consumer Taste

The preference and subjective valuation of goods and services by consumers, influencing their purchasing decisions and market demand.