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Since Fall of 2012, the price of oil has shown a steady decline as continued increase of global oil production that has far exceeded the rising demand for oil. Accordingly, many analysts in the energy field have had predicted the likelihood of further decline in oil price in the US market as the US continues to expand its domestic oil production with a long term objective of becoming even net exporter of oil by Y2030. Read some articles in the web on Shale Oil Production in US it s future.
Given the significant trend of declining oil price and expected independence of oil production by US in coming decade, draw an AS/AD diagram of macroeconomics model (not the oil market itself), explaining the effect on the US macro-economy of expected decline in oil price in 2013 and beyond. In your explanation in words with the help of the diagram, you must clearly explain the connection between changes in oil price and the fluctuations in macroeconomic fundamentals in the US economy. Then show the impact of continuous fall in oil price on the US economy by using the same AD-AS model during the recovery period of the economy from its great recession of 2008. The most recent price of crude oil is fluctuating within the range between $80 and $85/barrel.
Finally, explain why sharp decline in oil prices might not necessarily have positive or negative impact on the US equity markets (stock market) even at the current trend of volatile oil prices.
consider two countries home and foreign each of which produces two goods butter b and guns g using labour and capital.
Should the U.S currency be backed by gold? Recently the dollar has been losing value and there were a few countries advocating a change from using the dollar as the "international" currency (for example petroleum on the international market is bou..
I am an advisor to United State Federal Trade Administration in charge of doing background research that will be used for trade negotiations by policy makers. Discuss advantages and disadvantages of expanding NAFTA.
Assume that under the Bretton Woods system, dollar is pegged to gold at a rate of $35 a ounce and pound sterling is pegged to the dollar at a rate of $2 = £1.
What are the possible benefits of a disclosure process that is integrated with major policies in marketing, production, and finance? Do you think only “good news” items should be disclosed?
Accordingly, many analysts in the energy field have had predicted the likelihood of further decline in oil price in the US market as the US continues to expand its domestic oil production with a long term objective of becoming even net exporter of..
Suppose that the U.S. dollar-pound sterling spot exchange rate equals $1.60/£, while the expected future rate is $1.64/£. The yield on a one-year U.S. Treasury bill is 9% and on a one-year U.K. Treasury bill the yield is 8%.
A local chain store has asked Columbia to produce 10,000 loaves of the wheat bread per month with the store's name on the packaging. The store brand wheat will be identical in ingredients as well as technic of production. Estimates are sales of 10..
Brazilian Ethanol Producers (who make ethanol from sugarcane) have lower production costs than U.S. producers. Indeed, even though it costs 16 cents per gallon to transport ethanol from Brazil to the U.S
Assume two countries: the U.S. and Japan. Show, using demand and supply, how the $/¥ exchange rate is determined. Why do Japanese people want to sell Yen Why do Americans want to buy Yen
The US presently has a current account deficit with Japan. Determinje what would happen to the dollar or yen spot exchange rate and the current account deficit if there were a decrease in Japanese investment in the U.S.?
As in class, assume that the capital account is equal to zero, as are capital gains on external wealth. Using the notation we worked with in class and given the assumptions made in problem 2, state the "generic" account (that is, the current accou..
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