Rightward and upward shifts of the Phillips Curve in the 1970s and early 1980s were caused by
A) adverse shocks to aggregate supply.
B) adverse shocks to aggregate demand.
C) an increase in the misery index.
D) the Vietnam War.

Question

Quizplus · Accepted Answer

The rightward and upward shifts of the Phillips Curve in the 1970s and early 1980s were caused by adverse shocks to aggregate supply, such as the oil price shocks of the 1970s. These shocks caused an increase in the cost of production and a decrease in the level of output, leading to higher inflation and higher unemployment.

Rightward and Upward Shifts of the Phillips Curve in the 1970s