Question

Almora, a developing open economy, is experiencing an economic boom since it discovered oil reserves off its coast two years ago. Bill Hudson, an economist with the Finance Ministry of Almora, said in an interview that the oil boom has improved the average standard of living in the economy, Robin peters is an industry analyst who does not agree with Hudson's view. In one of his recent articles in the country's leading business daily, Robin claimed that the high rate of inflation following the boom has actually weakened the expansionary impact on the economy. Which of the following, if true, will support Bill's argument?

A. THe number of Almorans who had settled abroad but are coming back to their homeland has been increasing in the last two years.
B. There has already been any change in the average income level of low-income groups in the past five years.
C. THe diversity of population is very low in Almora.
D.The government increased its budget allocation toward unemployment benefits this year.
E. The manufacturing sector in Almora accounts for only 8% of its GSP.

Answer 1

A

Step-by-step explanation:

The increased rise inflation which means higher prices of goods(oil) due to excessive demand and incapability of meeting those demands will lead to an increase in the price of oil.

Increased demand means that more people are demanding and therefore more Almorans are demanding, which shows more Almorans moved back into Almora.

Inflation will lead to people having lower income due to the increased price of oil (which is a necessity in this day and age)