Figure 17-4

-Figure 17-4 shows four movements of the inflation rate and the unemployment rate.Which panel shows the movement associated with a "supply shock" like those of the 1970s?

Question

Figure 17-4
 
-Figure 17-4 shows four movements of the inflation rate and the unemployment rate.Which panel shows the movement associated with a "supply shock" like those of the 1970s?

Quizplus · Accepted Answer

Panel 3 shows a movement associated with a "supply shock" like those of the 1970s, where there is a simultaneous increase in inflation and unemployment, known as stagflation. This is caused by a decrease in the supply of goods and services, leading to higher prices and decreased economic output.

Figure 17-4 -Figure 17-4 Shows Four Movements of the Inflation Rate and the Inflation