The underlying reason why the expected future price of gasoline plays an important role in the current price of gasoline is because
A. the government is in complete control of the energy market.
B. along the supply chain, firms want to hold onto gasoline when they think the price is about to rise and sell it quickly when they think the price is about to fall.
C. the market is overly regulated.
D. the market is governed by two major players.
Answer: B
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The brief success of the OPEC cartel in the 1970s can most plausibly be attributed to
A) the dependence of industrial economies on oil. B) the fact that OPEC was a cartel formed by national governments. C) the inelastic demand for oil. D) the misguided policies of the U.S. government. E) the widespread expectation of much higher prices in the future.
Moral hazard occurs ________ an agreement is made and when monitoring the parties to the agreement is ________
A) before; easy B) before; costly C) after; easy D) after; costly
The most important reason for why some people have higher incomes than others is
A. employment discrimination. B. differences in wages and salaries. C. property income. D. government transfer payments.
To help close an inflationary gap, the government could:
A. run budget deficits. B. decrease taxes. C. increase government spending. D. run budget surpluses.