The recession of 1973-1975 was unusual in that both inflation and unemployment increased at the same time.This suggests that the primary cause of the recession was an
A)inward shift of the aggregate demand curve.
B)outward shift of the aggregate supply curve.
C)inward shift of the aggregate supply curve.
D)outward shift of the aggregate demand curve.

Question

Quizplus · Accepted Answer

When both inflation and unemployment increase at the same time, it suggests that the primary cause of the recession was a decrease in the availability of goods and services, or a decrease in the productivity of the economy. This is represented by an inward shift of the aggregate supply curve.

The Recession of 1973-1975 Was Unusual in That Both Inflation