Recall Application 3, "How the U.S. Economy has Coped with Oil Price Fluctuations," to answer the following questions:
-According to the application, an increase in the price of oil is similar in effect on consumer incomes as compared to a:
A) higher tax.
B) higher subsidy.
C) higher interest rate.
D) higher wage.

Question

Quizplus · Accepted Answer

According to the application, an increase in the price of oil is similar in effect on consumer incomes as compared to a higher tax. This is because both an oil price increase and a tax increase take away disposable income from consumers, leaving them with less money to spend on other goods and services.