The price of crude oil has been falling for the past several months. Crude oil is used to produce gasoline but?

The price of crude oil has been falling for the past several months. Crude oil is used to produce gasoline but is also used in the production and distribution of a great many other products. Explain, using Aggregate Demand-Aggregate Supply analysis, the effects that a fall in the price of crude oil would have on GDP, the unemployment rate, and the inflation rate.

2 Responses to “The price of crude oil has been falling for the past several months. Crude oil is used to produce gasoline but?”

  1. simplicitus Says:

    The price of oil has NOT been falling for the past several months.If anything, it has been rising:
    http://oil-price.net/dashboard.php?lang=en
    http://www.eia.doe.gov/dnav/pet/pet_pri_wco_k_w.htm

    As for the effect of oil prices rising:
    http://network.nationalpost.com/np/blogs/francis/archive/2009/09/16/oil-prices-mean-perpetual-recession.aspx
    http://en.wikipedia.org/wiki/Cost-push_inflation

    And more generally:
    http://en.wikipedia.org/wiki/Energy_intensity
    http://www.theoildrum.com/node/6575#more

  2. Trunk Kaiserslautern Says:

    .