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# If there is an oil-supply disruption resulting in higher

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If there is an oil-supply disruption resulting in higher [#permalink]

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09 Sep 2007, 07:44
If there is an oil-supply disruption resulting in higher international oil prices, domestic oil prices in open-market countries such as the United States will rise as well, whether such countries import all or none of their oil.

If the statement above concerning oil-supply disruptions is true, which of the following policies in an open-market nation is most likely to reduce the long-term economic impact on that nation of sharp and unexpected increases in international oil prices?
(A) Maintaining the quantity of oil imported at constant yearly levels
(B) Increasing the number of oil tankers in its fleet
(C) Suspending diplomatic relations with major oil-producing nations
(D) Decreasing oil consumption through conservation
(E) Decreasing domestic production of oil

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09 Sep 2007, 08:34
IrinaOK wrote:
If there is an oil-supply disruption resulting in higher international oil prices, domestic oil prices in open-market countries such as the United States will rise as well, whether such countries import all or none of their oil.

If the statement above concerning oil-supply disruptions is true, which of the following policies in an open-market nation is most likely to reduce the long-term economic impact on that nation of sharp and unexpected increases in international oil prices?
(A) Maintaining the quantity of oil imported at constant yearly levels
(B) Increasing the number of oil tankers in its fleet
(C) Suspending diplomatic relations with major oil-producing nations
(D) Decreasing oil consumption through conservation
(E) Decreasing domestic production of oil

Clearly D
Fact: disruption will increase a nation's oil price
The question is asking which policy will help offset the price in the long run.
A, B, E talk about changing the quantity of oil, but it doesn't matter. The price will still increase anyways.
C is kind out out of scope.
D is good because if you decrease the consumption, then, in a long run, you would use less oil, and therefore, even if the oil price increase, it will help the economic impact.
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09 Sep 2007, 11:42
D is the most likely answer.

Like bkk145 said, decreasing consumption will help to reduce the effects of the increase in prices.
All other choices are more or less dependant on the import of oil and E is a clear no.
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09 Sep 2007, 22:49
IrinaOK wrote:
If there is an oil-supply disruption resulting in higher international oil prices, domestic oil prices in open-market countries such as the United States will rise as well, whether such countries import all or none of their oil.

If the statement above concerning oil-supply disruptions is true, which of the following policies in an open-market nation is most likely to reduce the long-term economic impact on that nation of sharp and unexpected increases in international oil prices?
(A) Maintaining the quantity of oil imported at constant yearly levels
(B) Increasing the number of oil tankers in its fleet
(C) Suspending diplomatic relations with major oil-producing nations
(D) Decreasing oil consumption through conservation
(E) Decreasing domestic production of oil

Gotta be D. Elim ABC easily b/c they dont make any sense.

E also is odd, decreasing domestic oil prod. is likely to make things worse.
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09 Sep 2007, 23:53
D seems the only one here.

Author clearly points out that import would not impact the rise of prices.
It indicates that whether the oil is manufactured in the country itself or is bought from outsode doesn't matter.

All the other choices get eliminated here.
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10 Sep 2007, 03:47
D seems to the only option that could counter the impact in the long run.
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10 Sep 2007, 04:20
clear d
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04 Mar 2009, 20:23
Could you explain?

If there is an oil-supply disruption resulting in higher international oil prices, domestic oil prices in open-market countries such as the United States will rise as well, whether such countries import all or none of their oil.

If the statement above concerning oil-supply disruptions is true, which of the following policies in an open-market nation is most likely to reduce the long-term economic impact on that nation of sharp and unexpected increases in international oil prices?
(A) Maintaining the quantity of oil imported at constant yearly levels
(B) Increasing the number of oil tankers in its fleet
(C) Suspending diplomatic relations with major oil-producing nations
(D) Decreasing oil consumption through conservation
(E) Decreasing domestic production of oil

[Reveal] Spoiler: OA
D

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Re: CR - Oil-Supply Disruption [#permalink]

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04 Mar 2009, 20:32
priyankur_saha@ml.com wrote:
Could you explain?

If there is an oil-supply disruption resulting in higher international oil prices, domestic oil prices in open-market countries such as the United States will rise as well, whether such countries import all or none of their oil.

If the statement above concerning oil-supply disruptions is true, which of the following policies in an open-market nation is most likely to reduce the long-term economic impact on that nation of sharp and unexpected increases in international oil prices?
(A) Maintaining the quantity of oil imported at constant yearly levels
(B) Increasing the number of oil tankers in its fleet
(C) Suspending diplomatic relations with major oil-producing nations
(D) Decreasing oil consumption through conservation
(E) Decreasing domestic production of oil

Stem is saying oil price will go up if there are disruptions irrespective of the status of imports. 100% or 0% import a country does.

So clearly A & E are out as they concentrate on policy relating to import and domestic production.

B does not make sense and C is extreme

D is the best. Keep oil usage low so that the effect of fluctuations is low.

Is there a trap? Seemed pretty straight to me
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Re: CR - Oil-Supply Disruption [#permalink]

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04 Mar 2009, 21:06
D, if the country conserve oil, they don't have to buy oil when the oil price is high, they can use the oil saved. this improves the countries economy
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Re: CR - Oil-Supply Disruption [#permalink]

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04 Mar 2009, 22:48
between A & D,
A can be kept OUT as discussed above
hence D
Not a Great Q though(Wording point of view)
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Re: CR - Oil-Supply Disruption [#permalink]

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05 Mar 2009, 02:40
I chose B...
Q: which of the following policies in an open-market nation is most likely to reduce the long-term economic impact on that nation of sharp and unexpected increases in international oil prices
Here "Open-market nation" does not mean to US (because it was an example used by stem to depict the implication) - is that correct?
Now question is HOW an open market nation reduce economic impact?
If I say that by increasing number of oil tankers - it means that open market nation has not to depend on outside market for quite some time while it has enough resouce. Thus, the effort could save nation's economic aspect.
Could you tell me what's wrong in it?

What type of question is this? Inference or explanation?!?!
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Re: CR - Oil-Supply Disruption [#permalink]

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05 Mar 2009, 06:01
priyankur_saha@ml.com wrote:
I chose B...
Q: which of the following policies in an open-market nation is most likely to reduce the long-term economic impact on that nation of sharp and unexpected increases in international oil prices
Here "Open-market nation" does not mean to US (because it was an example used by stem to depict the implication) - is that correct?
Now question is HOW an open market nation reduce economic impact?
If I say that by increasing number of oil tankers - it means that open market nation has not to depend on outside market for quite some time while it has enough resouce. Thus, the effort could save nation's economic aspect.
Could you tell me what's wrong in it?

What type of question is this? Inference or explanation?!?!

If there is an oil-supply disruption resulting in higher international oil prices, domestic oil prices in open-market countries such as the United States will rise as well, whether such countries import all or none of their oil.

If the statement above concerning oil-supply disruptions is true, which of the following policies in an open-market nation is most likely to reduce the long-term economic impact on that nation of sharp and unexpected increases in international oil prices?

>>> Here "Open-market nation" does not mean to US (because it was an example used by stem to depict the implication) - is that correct? ---> Yes, you’re right! It refers to any open-market nation including U.S.

>>> Now question is HOW an open market nation reduce economic impact?
If I say that by increasing number of oil tankers - it means that open market nation has not to depend on outside market for quite some time while it has enough resouce. Thus, the effort could save nation's economic aspect.
Could you tell me what's wrong in it? ---> You yourself mentioned above that increasing the number of oil tankers will reduce dependency for quite some time and the question requires a solution than can help the nation in long run.

There can be many reasons why this option will not be a strong contender. Do you know that the population is not going to increase in the coming years? Do you know that the current consumers are going to keep their usage at a fixed level? and so on... You just don’t know anything about these factors. Isn’t it? So, the resources that might seem adequate right now may become scarce later.

So, in light of all these factors & available options, we can say that if we strive for decreasing the consumption of oil through conservation, then it will help those nations in the long term from the impact of increasing oil prices.

>>> What type of question is this? Inference or explanation?!?! ---> IMO, it’s an inference question.

Hope that helps.

By the way, what’s the OA?

Regards,
Technext
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Re: CR - Oil-Supply Disruption [#permalink]

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05 Mar 2009, 13:17
IMO D
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Re: CR - Oil-Supply Disruption [#permalink]

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05 Mar 2009, 14:06
IMO D
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05 Mar 2009, 15:25
What is the source of the question? I chose B as well, but D seems a better choice.
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Re: CR - Oil-Supply Disruption [#permalink]

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05 Mar 2009, 18:06
Definitely D
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Re: CR - Oil-Supply Disruption [#permalink]

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05 Mar 2009, 19:59
nice Technext, thanks for your explanation.....

Well I did consider those factors but hypnotized on B....

@botirvoy: This is Official Guide Question and OA is D.

Thanks to everyone.
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Re: CR - Oil-Supply Disruption [#permalink]

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06 Mar 2009, 11:34
As per the OG, the OE is
++++++++
If there is an oilsupply disruption resulting in higher international oil pricesdomestic oil prices in open-market countries such as the United States will rise as wellwhether such countries import all or none of their oil.

"58.If the statement above concerning oil-supply disruptions is truewhich of the following policies in an open-market nation is most likely to reduce the long-term economic impact on that nation of sharp and unexpected increases in international oil prices?
(A) Maintaining the quantity of oil imported at constant yearly levels
(B) Increasing the number of oil tankers in its fleet
(C) Suspending diplomatic relations with major oil-producing nations
(D) Decreasing oil consumption through conservation
(E) Decreasing domestic production of oil

Evaluation of a Plan
Situation International oil prices rise when a disruption in the oil supply occursin this event
open-market countries experience a rise in domestic oil priceseven if they do not import any oil

Reasoning What policy will reduce the economic impact of oil price increases? All open-market countries experience a rise in oil priceseven when they do not import oil. Thus importing oil is not the issue A nation can soften the impact of price hikes by using less oil because decreasing oil consumption would decrease the need to purchase oil at increased pricesconservation is a way to lower consumption

A Not all countries import oilfor those that do, maintaining the level of oil imports when prices fluctuate would affect the economy
B The number of oil tankers is irrelevant to the effect on the economy
C The diplomatic relationship among countries is irrelevant to the effect on the economy
D CorrectThis statement properly identifies a factor that will reduce the economic impact of increases in oil prices
E Decreasing domestic oil production would only make the situation worse."

+++++++
Now try the related Next Q
If there is an oilsupply disruption resulting in higher international oil pricesdomestic oil prices in open-market countries such as the United States will rise as wellwhether such countries import all or none of their oil.

59. Which of the following conclusions is best supported by the statement above?
(A) Domestic producers of oil in open-market countries are excluded from the international oil market when there is a disruption in the international oil supply
(B) International oil-supply disruptions have littleif any, effect on the price of domestic oil as long as an open-market country has domestic supplies capable of meeting domestic demand
(C) The oil market in an open-market country is actually part of the international oil marketeven if most of that country's domestic oil is usually sold to consumers within its borders
(D) Open-market countries that export little or none of their oil can maintain stable domestic oil prices even when international oil prices rise sharply
(E) If international oil prices risedomestic distributors of oil in open-market countries will begin to import more oil than they export

+++++++++++++++++++++++
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Re: CR - Oil-Supply Disruption [#permalink]

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06 Mar 2009, 12:40
nitya34 wrote:
Now try the related Next Q
If there is an oil-supply disruption resulting in higher international oil prices, domestic oil prices in open-market countries such as the United States will rise as well, whether such countries import all or none of their oil.

59. Which of the following conclusions is best supported by the statement above?
(A) Domestic producers of oil in open-market countries are excluded from the international oil market when there is a disruption in the international oil supply
(B) International oil-supply disruptions have littleif any, effect on the price of domestic oil as long as an open-market country has domestic supplies capable of meeting domestic demand
(C) The oil market in an open-market country is actually part of the international oil marketeven if most of that country's domestic oil is usually sold to consumers within its borders
(D) Open-market countries that export little or none of their oil can maintain stable domestic oil prices even when international oil prices rise sharply
(E) If international oil prices risedomestic distributors of oil in open-market countries will begin to import more oil than they export

(C) The oil market in an open-market country is actually part of the international oil market, even if most of that country's domestic oil is usually sold to consumers within its borders
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Re: CR - Oil-Supply Disruption   [#permalink] 06 Mar 2009, 12:40

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