The inflation associated with the oil price shocks in the 1970s after OPEC restricted the supply of oil is an example of
A. cost-push inflation due to a demand shock.
B. cost-push inflation due to a supply shock.
C. demand-pull inflation due to a supply shock.
D. demand-pull inflation due to a demand shock.
Answer: B
You might also like to view...
A reduction in current consumption to pay for the investment in capital intended to increase future production is known as the:
A. consumption effect. B. substitution effect. C. investment trade-off. D. income effect.
Which of the following statements concerning efficiency is correct?
A. If a toll road is heavily used so that traffic movement is slowed, the price per vehicle should be reduced since the road is generating more revenue. B. Economists advocate high prices for abundant resources and low prices for scarce resources. C. If a toll road is heavily used and traffic movement is difficult, the price per vehicle should be increased to shift some traffic to less-crowded roads. D. All of these options are desirable in promoting efficient use of scarce road space.
Holding all other things constant, when the price level rises, interest rates:
a. rise and firms want to borrow more for new plants and equipment and households want to borrow less for homebuilding. b. rise and firms will want to borrow less for new plants and equipment and households will want to borrow less for homebuilding. c. fall and firms want to borrow more for new plants and equipment and households want to borrow more for homebuilding. d. all of the above
Which of the following effects provide incentives for consumers to spend less when the price level rises?
a. the wealth effect and the interest-rate effect b. the wealth effect but not the interest-rate effect c. the interest-rate effect but not the wealth effect d. neither the wealth-effect nor the interest rate effect