The inflation and unemployment data for the 1970s suggest that the aggregate-supply shocks of that period caused the
A)relationship between the unemployment rate and the rate of inflation to remain stable and predictable and to exhibit a clear trade-off.
B)relationship between the unemployment rate and the rate of inflation to be similar to that found during the 1960s.
C)Phillips Curve to shift to the right.
D)Phillips Curve to shift to the left.

Question

Quizplus · Accepted Answer

During the 1970s, the aggregate-supply shocks, such as oil price shocks, led to stagflation, which caused the Phillips Curve to shift to the right, indicating higher inflation at each level of unemployment.

The Inflation and Unemployment Data for the 1970s Suggest That