Question

what would be a problem statement related to fluctuating fuel prices and its affect on capitalism?

Answer 1

ANSWER:

Capitalism is defined as an economic system where private entities are the owner of the factors of production. The oil market is unstable and as a result fuel prices fluctuate and change all the time. In today's world, majority of countries are grappling with insufficiency and acute shortage of fuel. The main concern is that fuel has been scarce in the market, thus making the access of this productive commodity rather difficult. The immediate effect of the oil price shock is a rise in the cost of production due to increased fuel cost. It leads to an inflationary effect (mainly cost push inflation which is accompanied by an unemployment situation). An overall inflation in the economy, the cost of production would also increase causing a reduction in supply, thus oil price fluctuation has adverse effects on the economy. Moreover impacts the economy through various channels, viz. monetary policy, external trade, real sector, rate of exchange and investment. Thus the primary problem is that regulatory measures promote capitalism, thus affecting the firm's performance in production sectors