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Economics Commentary - Gas Prices

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Introduction

Economics Commentary - Practice Gas Prices: What goes down must go back up www.Fredericknewspost.com November 1, 2009 - Date of Extract Word Count - November 4, 2009 - Date Commentary Written Sections - Sheheryar Javaid - IB1-2 This article is describes the effects on oil prices mainly caused by the increase in the price of crude oil and the weakening of the US dollar. Due to these factors, price inflation is caused which forces the prices of gas to increase. Inflation is a general and sustained increase in the price of goods and services over a period of time. The major cause of inflation is the extra printing of money. Increasing prices are a reaction to this. ...read more.

Middle

Demand is the willingness and ability of a consumer to buy a good or a service over a period of time at any given prices. On the other hand, supply is the willingness and ability of producers to supply good and services at a number of different prices. An increase in demand can push up prices which can be seen below in Fig. 10.1. Fig. 10.1 Another way to show the increase in price is a decrease in supply. This is shown in Fig. 10.2. Fig. 10.2 Overall this will cause many long and short term affects. It is predicted that prices will continue to go up. The United States will depend on foreign exchange from the countries in the Middle East who have oil. ...read more.

Conclusion

hybrid cars. Consumers will use more of their income to purchase the oil and will have less to spend. This will decrease demand for other goods and services which in turn would decrease economic growth. This will start a chain of negative consequences which could very well drive the country into a recession. Also, oil is a vital component in the production of many other goods and services, so this will decrease production of these goods. However, not all will be completely bad. This price increase should encourage the US to look for other sources of energy and fuel. Oil will eventually run out as it is a scarce resource so it is best to look for alternative sources as soon as possible. If this is possible, then it will solve not only the US' problems, but also a global problem. ?? ?? ?? ?? ...read more.

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