5 preguntas de Maximiliano

The price of oil and inflation are connected in a cause and effect relationship, that is, when the price of oil increases, inflation also increases in an economy. this is because, oil is a major input in the economy, that is, it is used for critical purposes such as fueling of vehicles for transportation, for running of industrial generators and machines, for heating homes, etc.for instance, if the price of oil increases in an economy, it will increase the cost of production for those using the oil in their production processes and they will automatically increase the cost of their products in order to offset the extra costs. this leads to general increase in the prices of products in the market and result in inflation.