Supply shocks in the 1990s
A)reduced the natural rate of unemployment.
B)helped hold down inflation.
C)had the opposite effect on the economy from the supply shocks of the 1970s.
D)All of the above.

Question

Quizplus · Accepted Answer

Supply shocks in the 1990s, unlike those in the 1970s which were largely negative (e.g., oil price shocks), were often positive, stemming from technological advancements and globalization. These positive supply shocks increased productivity, reduced the natural rate of unemployment, and helped hold down inflation, thus having the opposite effect on the economy from the negative supply shocks of the 1970s.

Supply Shocks in the 1990s