When OPEC nearly tripled the price of oil in late 1973,
A)U.S.real GDP increased as profits by oil producers increased.
B)U.S.real GDP did not change although the price level rose.
C)the U.S.price level fell because production became too expensive.
D)the U.S.price level rose and real GDP decreased.
E)both U.S.real GDP and the price level increased.

Question

Quizplus · Accepted Answer

When OPEC nearly tripled the price of oil in late 1973, the U.S.price level rose and real GDP decreased. This happened because of the decrease in consumer purchasing power due to the increased cost of oil, as well as decreased investment due to uncertainty in the economy. The resulting stagflation (high inflation and high unemployment) lasted for several years.

When OPEC Nearly Tripled the Price of Oil in Late