When OPEC nearly tripled the price of oil in late 1973,
A)U.S. real GDP did not change although the price level rose.
B)both U.S. real GDP and the price level increased.
C)the U.S. price level fell because production became too expensive.
D)the U.S. price level rose and real GDP decreased.
E)U.S. real GDP increased as profits by oil producers increased.

Question

Quizplus · Accepted Answer

The sharp increase in oil prices led to higher production costs, causing inflation (rise in price level) and a decrease in real GDP due to reduced economic activity.

When OPEC Nearly Tripled the Price of Oil in Late