The OPEC oil shocks in 1973-1974 are an example of:
A)favorable supply shock, shifting the short-run aggregate supply curve rightward.
B)favorable supply shock, shifting the short-run aggregate supply curve leftward.
C)adverse supply shock, shifting the short-run aggregate supply curve rightward.
D)adverse supply shock, shifting the short-run aggregate supply curve leftward.

Question

Quizplus · Accepted Answer

The OPEC oil shocks in 1973-1974 were an adverse supply shock, as the supply of oil decreased while demand remained constant, leading to higher prices. This would shift the short-run aggregate supply curve leftward, as production costs increase and firms produce less output at any given price level.

The OPEC Oil Shocks in 1973-1974 Are an Example Of