what-is-the-likely-impact-of-a-significant-increase-in-oil-prices-on-the-economy

Question

What is the likely impact of a significant increase in oil prices on the economy according to the Real Business Cycle Model?

Accepted Answer

A decrease in aggregate supply, leading to lower production and employment

Answer

A decrease in government spending, leading to lower inflation

Answer

An increase in aggregate demand, leading to higher production and employment

Answer

An increase in consumer spending, leading to higher inflation