Why might an oil cartel's effectiveness be undermined during a recession but strengthened during an economic boom?
What will be an ideal response?
During a recession the overall level of economic activity is contracting which also has the effect of lowering or slowing the demand for oil. Under these circumstances there would be great incentive for members of the cartel to lower prices. By contrast an economic boom is likely to keep the cartel stronger than ever since demand for its products are rising and member firms will find it easier to continue to abide by their cartel agreements.
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Which of the following illustrates an optimistic expectation of the people about the economy?
a. A movement to the right along the aggregate demand curve b. A rightward shift of the aggregate demand curve c. A leftward shift of the aggregate demand curve d. A movement to the left along the aggregate demand curve e. A flatter slope of the aggregate demand curve
(Consider This) Kara was earning $40,000 per year. When her income rose to $60,000 per year, she enjoyed the higher level of consumption for a while, but eventually she was no more happy than when she earned $40,000 (assume prices didn't change over
this time period). Economist Richard Easterlin described this as: A. anchoring. B. the endowment effect. C. irrational economic behavior. D. the hedonic treadmill.