Recall the Application about the causes of oil price increases to answer the following question(s). Economist Lutz Kilian examined the importance of supply disruptions to the U.S. oil market by constructing measures of supply disruptions in oil producing countries based on a detailed examination of prior trends in demand and specifications in oil contracts.
-According to this Application, oil price increases may be caused by
A) increases in world demand.
B) increases in world supply.
C) increase in the U.S. supply of money.
D) beneficial supply shocks for the U.S. consumer.

Question

Quizplus · Accepted Answer

According to the Application, Kilian's study found that supply disruptions in oil producing countries were a significant factor in causing oil price increases. This suggests that increases in world demand (choice A) could be a possible cause of oil price increases. Choices B, C, and D are not supported by the information provided in the Application.

Recall the Application About the Causes of Oil Price Increases