During the 1970s, real shocks to the U.S.economy caused:

Question

Quizplus · Accepted Answer

Real shocks, such as the oil crisis in the 1970s, decreased aggregate supply which led to an increase in the price level and a decrease in real output. This resulted in higher unemployment rates as businesses cut back on hiring. The Phillips curve, which shows the inverse relationship between inflation and unemployment, shifted leftward as the economy experienced both higher inflation and higher unemployment. Therefore, B is the best choice as it accurately describes the consequences of the real shocks.

During the 1970s, Real Shocks to the U