Which of the following might cause the inflation rate to spike up sharply?

A Prices on world oil markets rise steeply due to war in the Middle East.

B Plentiful rainfall and moderate temperatures result in good harvests of

wheat and soybeans.

C The purchasing power of the average consumer decreases due to a

sluggish economy.

D The items in the CPI market basket change to account for changing

consumer buying habits.

Question

Computers & Technology

Javier Good

4 January, 13:12

Which of the following might cause the inflation rate to spike up sharply?

A Prices on world oil markets rise steeply due to war in the Middle East.

B Plentiful rainfall and moderate temperatures result in good harvests of

wheat and soybeans.

C The purchasing power of the average consumer decreases due to a

sluggish economy.

D The items in the CPI market basket change to account for changing

consumer buying habits.

+3

Answers (1)

Know the Answer?

Brian Joseph · Answer 1

Prices on world oil markets rise steeply due to war in the Middle East leads to inflation rate to spike up sharply

Explanation:

Oil prices and inflation rates are often seen as intertwined in a relationship between cause and effect. Inflation - which is the indicator of general price changes across the economy - follows higher in the same direction when oil prices move up. Increases in oil price depress the supply of other products, as they increase the production costs.

The Middle East countries are known on the world market for their vast oil reserves. So when the highest oil-producing region in the world is in chaos, the rate of inflation is expected to rise sharply around the world.