In the conventional view, outward shifts of the Phillips Curve in the 1970s and early 1980s were caused by:
A)adverse shocks to aggregate supply.
B)adverse shocks to aggregate demand.
C)an increase in the misery index.
D)the Vietnam War.

Question

Quizplus · Accepted Answer

The outward shifts of the Phillips Curve in the 1970s and early 1980s were caused by adverse shocks to aggregate supply, primarily due to increases in oil prices from the OPEC embargo and other factors. This led to higher prices and lower output, creating a stagflationary environment that was difficult for policymakers to combat.

In the Conventional View, Outward Shifts of the Phillips Curve