The supply-side inflation episodes of the 1970s
A) occurred during periods of full employment of both human and capital resources.
B)shifted the aggregate supply curve downward to the right.
C)were largely the result of crude oil price increases.
D)were touched off by a sharp decline in the money supply.
E)were caused, in part, by the lack of market power of labor unions and large corporations.

Question

Quizplus · Accepted Answer

The supply-side inflation episodes of the 1970s were largely the result of crude oil price increases. OPEC countries raised the prices of crude oil, which caused the cost of producing goods and services to increase, shifting the aggregate supply curve downward to the right. This led to higher prices and inflationary pressures.

The Supply-Side Inflation Episodes of the 1970s