A reduction in the price of oil will tend to cause which of the following?
A)no change in the real wage in the medium run
B)an increase in the aggregate price level as output increases
C)an increase in investment in the medium run
D)no change in the interest rate in the medium run

Question

Quizplus · Accepted Answer

A reduction in the price of oil decreases production costs, leading to higher profits and increased output. This can stimulate investment as firms expand production capacity in response to higher demand and profitability in the medium run.

A Reduction in the Price of Oil Will Tend to Cause