Jacob Gilbert
Macro Economics
Current Event #1
For my current event, this week I found an article that entails China possibly cutting off its oil
supply to North Korea because of their recent nuclear launches. This issue is not only something
that revolves around North Korea and China but it also has an impact on countries all around the
world. I say this because the media has been covering a great deal of North Korean actions lately
and the talk of a possible war. If China does decide to cut off their oil supply to North Korea this
could cause an irruption in politics and the North Korean economy since China is their number
one supplier in oil. An oil embargo is not likely to happen but we can look at what effect this
might have on North Korea’s economy after covering the concepts in our textbook over chapter
one if China does decide to do so.
Many countries, especially South Korea have a limited amount of oil. In chapter one on page
four the book defines scarcity as, “the limited nature of society’s resources”. If China would
happen to place an oil embargo on North Korea this would cause a great deal of harm to the
North Korean infrastructure. Their economy would more than likely struggle to obtain oil from
other countries and in the process, would lose money doing so. This would also in turn cause an
efficiency problem. According to the textbook, “Efficiency means that society is getting the
maximum benefits from its scarce resources” (5). Of course, an oil embargo would not be the
most efficient outcome for North Korea since oil is already a scarce resource for them.
Although North Korea is not known for being the most equality friendly country in the world a
lack of oil would make things even worse. On page five in the textbook equality is described as,
“the property of distributing economic prosperity uniformly among the members of society”.