As a result of increased tensions in the Middle East, oil production is down by 1.21 million barrels per day—a 5 percent reduction in the world’s supply of crude oil. Explain the likely impact of this event on the market for gasoline and the market for small cars.
What will be an ideal response?
Answer: The market for gasoline would increase as the world supply of oil is down due to increased tension in the middle east. People will rely more on alternate sources of fuel for running cars and they will depend more on gas fuel. Gasoline fits the bill for it.
The market for small cars would increase as small cares consume less petrol then big cars
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Okun's Law says that the difference between the unemployment rate and the natural unemployment rate determines
A) potential GDP. B) real GDP. C) the real interest rate. D) the gap between potential GDP and real GDP. E) the gap between the inflation rate and the unemployment rate.
According to public choice theorists, people behave differently in the market sector than in the public sector because
A) the more people there are in the market sector the less influence they are able to exert, whereas the more people there are in the public sector the more influence they are able to exert. B) the fewer people there are in the market sector the less influence they are able to exert, whereas the fewer people there are in the public sector the more influence they are able to exert. C) self-interest is the motivating force in the market sector, whereas altruism is the motivating force in the public sector. D) altruism is the motivating force in the market sector, whereas self-interest is the motivating force in the public sector. E) institutional arrangements are different in the two sectors.