The increases in oil prices in 1974 due to OPEC's actions caused the short-run aggregate supply curve to shift to the left. Canada saw increases in both unemployment and inflation as a result. The Bank of Canada could not address both increased unemployment and increased inflation because OA) contractionary monetary policy which would lower inflation would further increase unemployment. O B) expansionary monetary policy which would lower unemployment would further increase inflation. OC) Canadians at the time preferred high unemployment to high inflation. O D) Both A and B are correct answers.
The increases in oil prices in 1974 due to OPEC's actions caused the short-run aggregate supply curve to shift to the left. Canada saw increases in both unemployment and inflation as a result. The Bank of Canada could not address both increased unemployment and increased inflation because OA) contractionary monetary policy which would lower inflation would further increase unemployment. O B) expansionary monetary policy which would lower unemployment would further increase inflation. OC) Canadians at the time preferred high unemployment to high inflation. O D) Both A and B are correct answers.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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The increases in oil prices in 1974 due to OPEC's actions caused the short-run
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