The first OPEC oil-price shock in 1973 caused the AS curves in all industrialized countries to shift upward.The Bank of Canada validated this negative supply shock with an increase in the money supply,whereas in the United States such monetary validation did not take place.The predictable result was that
A) both countries experienced large increases in price levels and almost no recession.
B) Canada experienced a large increase in its price level but almost no recession,and the U.S.experienced a smaller increase in its price level but a significant recession.
C) Canada experienced a one-time price increase and the U.S.experienced persistent inflation.
D) the U.S.experienced a large increase in its price level but almost no recession,and Canada experienced a smaller increase in its price level but a severe recession.
E) both countries experienced small increases in price levels and severe recessions.
Correct Answer:
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