In Conclusion...: Difference between revisions
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Latest revision as of 17:28, 4 December 2006
The price of crude oil has risen drastically over the last five years. While the inflation rate of the economy grew by 13.8 percent, the price of crude oil rose by 144.3 percent. These differences are extreme and many factors can account for them. In general, crude oil's finite supply and an ever increasing world demand have driven the price of oil up in the long-run, while speculation over wars, disasters, and output by certain countries has caused the market to increase in the short-run. With increased prices, the potential level of output falls due to a decline in consumption. This hurts the economy and forces the government and other institutions to make up the difference caused by a decline in consumption.
