Suppose the economy is initially in equilibrium, and then an energy shock occurs, such as when OPEC raised oil prices in the 1970s.In terms of inflation and unemployment, which of the following is likely to result?
A) Prices and unemployment will likely rise.
B) Prices and unemployment will likely fall.
C) Prices will rise and unemployment will likely fall.
D) Prices will fall and unemployment will likely rise.

Question

Suppose the economy is initially in equilibrium, and then an energy shock occurs, such as when OPEC raised oil prices in the 1970s.In terms of inflation and unemployment, which of the following is likely to result?  
A) Prices and unemployment will likely rise. 
B) Prices and unemployment will likely fall. 
C) Prices will rise and unemployment will likely fall. 
D) Prices will fall and unemployment will likely rise.

Quizplus · Accepted Answer

The Answer of Suppose the economy is initially in equilibrium, and then an energy shock occurs, such as when OPEC raised oil prices in the 1970s.In terms of inflation and unemployment, which of the following is likely to result?  
A) Prices and unemployment will likely rise. 
B) Prices and unemployment will likely fall. 
C) Prices will rise and unemployment will likely fall. 
D) Prices will fall and unemployment will likely rise.

Suppose the Economy Is Initially in Equilibrium, and Then an Energy