1. SummaryThe objective of the study is to measure the impact of changes in oil prices and other macroeconomic variables such as consumption, public expenditure and average exchange rates on gross domestic product-GDP in the context of the Pakistani economy. The study is based on secondary data and the observation is 150 with five variables and 30 years of data. Data comes from World Bank, Inflationdata.com, State Bank of Pakistan, Economic Survey of Pakistan, Federal Reserve Bank of America, Federal Bureau of Statistics Pakistan, Pakistan Development Review, Federal Board of Revenue, OPEC and Euro Journal. First, the stationaryness of the variables was verified by a more complete Dickey unit root test and augmented data. All variables were stationary except the average exchange rate which was non-stationary. By the method of ordinary least squares and the Johansen cointegration test, we find both a short-term relationship and a long-term relationship. The main conclusion of the study is that the evolution of oil prices has a negative relationship with GDP, while the evolution of public expenditure and average exchange rates has a positive relationship or impact on GDP. Since oil is Pakistan's major import and we spend a lot of foreign exchange every year to purchase this basic necessity, the government therefore has two policy recommendations. Firstly, the government should either try to find cheap and better substitutes for oil like CNG or LPG, but should also try to involve the foreign multinational companies and MNCs to do oil exploration, especially in the Attock region, Balochistan and Sindh, in order to exploit these available resources. overcome this deficiency. Second, if the government provides subsidies to encourage the common man to increase his purchasing power, this puts additional pressure...... middle of document...... l security WashingtonHillard G. Huntington (2007 ), “Oil Shocks and Real US income. (Industry Overview) », | The Energy Journal. Karl Scerri and Adriana Reut (2009), “UK public finances and oil prices: tax bonanza from black gold”, Directorate for Member States Economies, EU. Rehana Siddiqui (2000) “Energy demand and the impact of changes in energy prices on income” Pakistan Institute of Development Economics Islamabad Syrous K. Kooros, Ayser Phillip Sussan, Marjorie Semetesy (2006), “The Impact of Oil Prices on Employment”, International Research Journal of Finance and Economics, United States Department of Energy report, 2006 pp. 14512. Websites www.iags.orgwww.worldbank.orgwww.sbp.gov.pkwww.fianace.gov.pkwww.worldbankdevelopmentreport.orgwww.entrepreneur.comwww.e1.newcastle.edu.au/coffeewww.eurojournals.com/finance