Which of the following is (are)linked to (an)adverse supply shock(s)?
A)the Arab-Israeli war of 1973
B)the Iranian revolution of 1979
C)the wage renegotiations that followed the termination of U.S.wage and price controls in 1973
D)all of the above
E)none of the above

Question

Quizplus · Accepted Answer

All of the given events are linked to adverse supply shocks. The Arab-Israeli war of 1973 led to an oil embargo by Arab countries and a sharp increase in oil prices, which caused supply disruptions and inflation. The Iranian revolution of 1979 resulted in a similar situation with reduced oil production and higher prices. The wage renegotiations following the termination of wage and price controls in 1973 led to higher labor costs and reduced profit margins, which also put upward pressure on prices.

Which of the Following Is (Are)linked to (An)adverse Supply Shock(s)