Which of the following allegedly contributed to the stagflation in the mid-1970s?
A) Appreciation of the dollar.
B) A sharp drop in the prices of farm products.
C) A dramatic increase in oil prices.
D) Rising productivity in manufacturing.

Question

Quizplus · Accepted Answer

The dramatic increase in oil prices contributed significantly to the stagflation in the mid-1970s. The oil price shocks of 1973 and 1979 caused a sharp increase in the cost of production, leading to higher prices, reduced output, and high unemployment.

Answer: D 
 Rising productivity in manufacturing actually contributed to economic growth and a decline in inflation during the mid-1970s, rather than stagflation.

Which of the Following Allegedly Contributed to the Stagflation in the Mid-1970s