According to The Economist magazine, the two worst recessions of the 1970s were preceded by huge and sudden rises in the price of oil, first in 1973 and then in 1979. These twin spikes, both engineered by the Organization of the Petroleum Exporting Countries limiting its oil shipments, are still the textbook example of an economic "shock" - a sudden change in business conditions. Using an aggregate demand and aggregate supply model, show the impact of these oil shocks on the US economy in the 1970s.
1. Draw your own graph on a piece of paper (don't download a graph from the internet).
2. Clearly label all axes and lines.
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According to The Economist magazine, the two worst recessions of the 1970s were preceded by huge and sudden rises in the price of oil, first in 1973 and then in 1979. These twin spikes, both engineered by the Organization of the Petroleum Exporting Coun