In 1973, the Organization of Petroleum Exporting Countries (OPEC) engineered a quadrupling of oil prices by restricting oil production. Which of the following is an appropriate description of this negative supply shock?
A) The AS curve likely shifted to the left and output likely fell because of this adverse shock.
B) In the short-run there was a movement out of general equilibrium leading to an increase in inflation as a likely result of this adverse shock.
C) In the short-run there was a movement out of general equilibrium leading to an increase in unemployment as a likely result of this adverse shock.
D) all of the above
E) none of the above
D
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The international trade effect states that a(n) ________ in the price level will ________ net exports
A) increase; increase B) decrease; decrease C) increase; decrease D) decrease; not affect
The financial system performs the role of communicating information by
A) constantly increasing the liquidity of most assets. B) constantly reducing the riskiness of most assets. C) incorporating all available information into the prices of financial assets. D) providing to investors for a nominal charge all government reports available about a particular company.