Question

Which shock can the fed deal with most effectively?

Answer 1

A major oil shock can the fed deal with most effectively.

It is accompanied by an oil crisis, a sudden rise in oil prices, and often a decline in supply. Since oil is a major source of energy for industrialized countries, the oil crisis can threaten the economic and political stability of the global economy as a whole.

In the aftermath of World War II, there were two major oil crises. Oil exports to the United States, Japan, and Western Europe, which consume more than half of the world's energy, are also banned.

The OPEC decision was in retaliation for Western support for Israel against Egypt and Syria during the Yom Kippur War (1973), and the US dollar (the currency used to sell oil) that caused the dollar to undermine OPEC's export revenues. It was done in response to the sustained decline in the.

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