The result of the supply shocks of 1973-1974 was to
A)reduce aggregate output and raise the price level.
B)reduce the price level and raise aggregate output.
C)reduce both aggregate output and the price level.
D)raise both aggregate output and the price level.

Question

Quizplus · Accepted Answer

The supply shocks of 1973-1974, which included the oil embargo and resulting high oil prices, reduced aggregate output due to decreased production and higher input costs for businesses. This led to a decrease in supply, causing inflation and raising the price level.

The Result of the Supply Shocks of 1973-1974 Was to