In the mid-1970s the price of oil rose dramatically.This
A)shifted aggregate supply left,the price level rose,and real GDP fell.
B)caused U.S.prices to fall,and real GDP rose.
C)caused an increase in U.S.prices and real GDP.
D)caused a decrease in U.S.prices and real GDP.

Question

Quizplus · Accepted Answer

The rise in oil prices leads to an increase in production costs for firms, causing a leftward shift in aggregate supply. This results in a rise in the price level and a decrease in real GDP. Therefore, choice A is the best answer.

In the Mid-1970s the Price of Oil Rose Dramatically