Question

How did the 1979 oil shock affect the US economy?

Answer 1

The correct answer is: " It caused inflation to rise and the economy to slow".

The 1979 oil stock consisted on a large increase in oil prices, which affected many industries where oil was the principal energy source. As the resources used in production processes became more expensive, so did the final products generated. This inflation slowed down economic growth as people started to demand a lower amount of the more expensive products, aggregate demand levels dropped and so did employment levels.

Answer 2

It caused inflation to rise and the economy to slow.