Summary of an Aggregate Supply Article

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Submitted By Hello78
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Aggregate Supply
Summary: ‘Russia and Venezuela to fight low oil prices’ is the title of this article it discusses how the surprisingly low prices of oil have had a huge impact on Russia because the supply of oil has outstripped the demand. There is also mentions of a 30% decrease in the prices of oil, the article also says that the demand for oil has been falling everywhere and these oil dependant countries believe that the only way to drive oil prices back up and maintain some form of income for the economies as a whole is to ‘cut the aggregate production in the face of weaker demand’.
Opinion: In terms of my opinion I find this article interesting as there are lots of problems in all of these countries that are causing oil prices to fall. For me I feel like it’s clear that one of the large reasons for the fall in aggregate demand for oil is that China has faced an extreme slowdown in economic growth and Japan have fallen in to recession, these huge countries account for a large share of the demand for oil hence the drop. In terms of aggregate supply it means that production has to be cut massively in Russia and Venezuela as mentioned in the article because this will be the only way to drive the prices back up, in my opinion if the aggregate supply of oil doesn’t decrease it will mean that all economies will face lower oil prices for an extended period meaning the Russian and Venezuelan economies will deteriorate. Otherwise the only other option is to increase the aggregate demand for oil around the world; however this is near impossible with new technology meaning electric/hybrid cars meaning less of a need for…...

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