The United States saw the highest gasoline prices in 2008. To stop gas prices fr

Question

The United States saw the highest gasoline prices in 2008. To stop gas prices from rising, President Obama used the U.S. Strategic Petroleum Reserves, an emergency fuel supply held underground in Louisiana and Texas. There is said to be roughly 750 million barrels in storage. While providing only short-term solutions it can be quite effective if only used in special circumstances.

1) When President Obama used the Strategic Petroleum Reserves he, in effect, allowed gas prices to decrease. What happened to the quantity of gas people purchased?

A. It decreased.

B.It remained the same

C. It increased.

2) With lower gas prices what might happen to driving habits?

A.There would be no effect on driving.

B. People would likely drive less.

C. People would likely drive more.

3) With lower gas prices, would people demand more fuel efficient automobiles or less efficient automobiles?

A. More fuel efficient automobiles

B. Could be either

C. Less fuel efficient automobiles

Explanation / Answer

a) As the price of the gasoline decreased the quantity purchased by the people will rise. The answer is "C", it increased.

b) With lower gas price people will drive more, the answer is "C".

c) With lower gas price people will demand less fuel-efficient automobiles as they are paying less overall. The answer is "C".

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