THE GLOBAL ECONOMY Essay Example | Topics and Well Written Essays - 2000 words

THE GLOBAL ECONOMY - Essay Example This sort of anticipation has led to the further fall in oil prices. Another issue that the researcher discusses is that of the fluctuating exchange rates that has in turn caused variability in interest rates. The main aim of the research is to analyse the various issues faced by the global economy and how has the economy dealt with the challenges. The research allows the researcher to study the various economic issues across the globe and the main reasons behind such issues and derive a solution to overcome these issues. The crude oil prices in the economy have experienced a recent decline which had serious impacts on the economy. The global demand and supply conditions for the crude oil has led to the possible decline in crude oil prices (Fornari, et al., 2002). Prices are expected to change rapidly based on the anticipation of the researchers before the actual change. Expectation for the global oil demands have been anticipated downwards in the economy and the growth in oil prices was expected to be much lower in the economy (Jimenez-Rodriguez and Sanchez, 2005). Further, the intensity of the rise in oil prices have become half of what it was during the previous years. It had resulted in declining oil intensity and the energy efficiency of the oil prices. The researcher has found that Saudi Arabia has reduced OPEC’s oil supply and the prices were stabilized (Jimenez-Rodriguez and Sanchez, 2005). The oil price fluctuations and the inflation rates have a positive correlation in the economy (Kim and Roubini, 2000). High inflation led to high rise in oil prices within the economy and it had an impact on the oil producing companies as there was a very low demand for crude oil. The low demand was due to rise in price for crude oil. As a result, there was excess supply of crude oil in the economy and gradually the prices fell in the later years. Rise in oil prices has led to lower output production in the