In the 1970s, one of the causes of stagflation was _____
A) rising unemployment together with economic growth.
B) deflation coupled with a decline in money supply.
C) crop failures that shifted the aggregate supply curve left.
D) deficits coupled with rising unemployment.
E) inflation coupled with balance of trade deficits.

Question

Quizplus · Accepted Answer

Stagflation in the 1970s was partly caused by supply shocks, such as crop failures, which shifted the aggregate supply curve to the left, leading to higher prices (inflation) and lower output, a combination that characterizes stagflation.

In the 1970s, One of the Causes of Stagflation Was