Sharply rising oil prices are most likely to lead to a:
A) Negative demand shock
B) Positive demand shock
C) Negative supply shock
D) Positive supply shock

Question

Quizplus · Accepted Answer

Sharply rising oil prices would result in a negative supply shock as it would increase the cost of production for goods and services that rely on oil, leading to a decrease in the supply of these goods and services. This can lead to an increase in prices and a reduction in real GDP.

Sharply Rising Oil Prices Are Most Likely to Lead to A