Because fluctuations in the world oil price make the U.S.​ short-run macroeconomic equilibrium​ fluctuate, someone suggests that the government should vary the tax rate on​ oil, lowering the tax when the world oil price rises and increasing the tax when the world oil price​ falls, to stabilize the oil price in the U.S. market. If this suggestion is​ implemented, when the world price of oil​ ______, aggregate supply would​ ______.   A. ​changes; not change   B. ​falls; increase   C. ​rises; decrease   D. ​falls; decrease   E. ​rises; increase

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Chapter18: Debates In Macroeconomics Over The Role And Effects Of Government
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Because fluctuations in the world oil price make the U.S.​ short-run macroeconomic equilibrium​ fluctuate, someone suggests that the government should vary the tax rate on​ oil, lowering the tax when the world oil price rises and increasing the tax when the world oil price​ falls, to stabilize the oil price in the U.S. market.

If this suggestion is​ implemented, when the world price of oil​ ______, aggregate supply would​ ______.

 

A.

​changes; not change

 

B.

​falls; increase

 

C.

​rises; decrease

 

D.

​falls; decrease

 

E.

​rises; increase 

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