Question

Refer to the Article Summary. The unexpected increase in the supply of oil mentioned in the article summary resulted in a decrease in the price of oil. When the price of oil falls unexpectedly due to a supply shock, the equilibrium price level ________ and the unemployment rate ________ in the short run. A. Falls.B. Falls rises. C. Falls falls.D. Rises rises.E. Rises.

Answer 1

D. Rises rises.

Step-by-step explanation:

The concepts of demand and supply of oil are directly associated with the price of this product and the ability to promote the economic success of the company responsible for it, which can increase or decrease the rate of employability and consequently decrease the rate of unemployment.

When there is an increase in the oil supply, it means that the demand for customers is low and for that reason, the price should decrease, however, when there is a drastic drop in that price the level of equilibrium prices increases and the unemployment rate increases in short term.