In the market for crude oil,everything held constant,if rate of interest of simple bank accounts or interest-bearing investments decline:

Question

Quizplus · Accepted Answer

The correct answer is E. When the rate of interest on simple bank accounts or interest-bearing investments declines, the opportunity cost of holding crude oil as an investment decreases. This makes it less attractive to hold crude oil for investment purposes, which leads to a decrease in the demand for crude oil in the present period. As a result, the extraction of crude oil will fall in the present period.

In the Market for Crude Oil,everything Held Constant,if Rate of Interest