Recall the Application about energy price uncertainty and its impact on investment spending and GDP growth to answer the following question(s). Increases in oil prices can lead to a drop in GDP. However, uncertainty about oil prices is also an important factor. The volatility of oil prices creates uncertainty for firms making investment decisions, and adversely affects GDP growth.
-According to this Application, the volatility of energy prices can contribute to uncertainty in the economy. An increasingly uncertain future will tend to cause firms to
A) delay their investment decisions.
B) wait for significant GDP growth before reducing investments.
C) rely on the government to make their investment decisions for them.
D) continue with a stable flow of investment spending so as not to get trapped by a downturning economy.

Question

Quizplus · Accepted Answer

Volatility in energy prices contributes to uncertainty in the economy, which can cause firms to delay their investment decisions. This is because they may be hesitant to make investments in an uncertain future.

Recall the Application About Energy Price Uncertainty and Its Impact