Assignment:
As covered in my lectures, when D & S shift, there is an effect on equilibrium price, and I'd like you to focus on that for this assignment. I'm attaching an article covering a recent event in Saudi Arabia that will affect the supply of oil, and thus prices for gasoline (which will affect other areas calculated in our GDP, for example higher gas prices mean less C in other areas). The main information you'll need to write this discussion is on the first page, but I'm including the entire article in case you'd like to read more. Here are the specifics to discuss:
- The event in the article caused a change in S and/or D. What is that change and what would be the effect on gas/oil prices?
- A change in gas prices will cause a change in C, I, and GDP, what are those changes likely to be? You may want to use the Circular Flow model to assess those.
- Feel free to use any prior class theories if you like, but it's not required.
- If you go deeper, make sure you first cover the above specifics I asked for, and also that you know what you're talking about. I'm not impressed by posers, and I can always tell! (I can also tell when someone copies off the internet... just saying ;)).
Your work should be about a page long, give or take a sentence. I'm not requiring any specific format, so just use your best judgement on what counts as a page. A good rule of thumb is if you've covered everything I asked for above. Don't forget this is a discussion. Enjoy! :)
Readings:
After Saudi Attack, Oil Market Is on Edge: What if the Other Shoe Drops?
By Clifford Krauss