Asked by Zainab Issah on Jun 11, 2024
Verified
In 1980, the combination of inflation and unemployment the U.S. was experiencing
A) resulted from a leftward shift of the short-run Phillips curve.
B) was consistent with feasible inflation-unemployment combinations provided by the Phillips curve of the 1960s.
C) followed two supply shocks that were triggered by the Organization of Petroleum Exporting Countries.
D) resulted from expansionary monetary policy.
Short-run Phillips Curve
A graphical representation that shows the inverse relationship between the level of unemployment and the rate of inflation in the economy over the short-term.
Inflation
The rate at which the general level of prices for goods and services is rising, and, consequently, the purchasing power of currency is falling.
Unemployment
Occurs when individuals who are actively seeking work are unable to find employment. It is typically measured as a percentage of the labor force.
- Determine the impacts of supply shocks on economic output, inflation rates, and the Phillips curve.
- Investigate how alterations in oil prices and economic downturns influence inflation and unemployment rates.
Verified Answer
LO
Leslie OliveraJun 11, 2024
Final Answer :
C
Explanation :
The combination of inflation and unemployment the U.S. experienced in 1980, often referred to as stagflation, followed two major oil supply shocks in the 1970s triggered by the Organization of Petroleum Exporting Countries (OPEC). These shocks led to higher prices for oil, increasing production costs and contributing to both inflation and unemployment.
Learning Objectives
- Determine the impacts of supply shocks on economic output, inflation rates, and the Phillips curve.
- Investigate how alterations in oil prices and economic downturns influence inflation and unemployment rates.