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Economics Question Help!



I don't understand the first question as it should be 110% (C) and not 130% (D). Also, on part b an increase in the price of global crude oil price wouldn't that lead to a decrease AD instead of a shift in AD towards the right.
I can't see the images that you have attached so I can't help with the first two. The demand for crude oil is quite inelastic, since it is used to produce a lot of other products and used as a source of fuel/energy, therefore a change in the price shouldn't affect the demand by much, especially if the change is global. Since AD = C + I + G + (X-M), and I don't think that C,I,G,X or M will change by much, AD shouldn't be shifted by much or anything at all. AS should be shifted though(up I think), since there would be an increase in the costs of production.

I find that in economics though there are often many different answers to the same question, so I am wondering why you thought AD decreased?

Hope this helps
(edited 3 years ago)

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