Final answer:
Tensions between the US and the Middle East in the 1970s led to increased oil prices and domestic inflation, gas shortages, and influenced long-term economic strategies, including trade agreements.
Step-by-step explanation:
The economic effect of the tension between the US and the Middle East led to increased oil prices. During the 1970s, due to the Arab oil embargo and policies of oil-producing nations, there was a sharp rise in oil prices, which exacerbated domestic inflation and led to gas shortages for consumers. This situation not only affected the US but also other nations supporting Israel, resulting in a global impact on economies dependent on Middle Eastern oil.
In addition, the tensions and consequent rise in oil prices played a role in triggering broader economic challenges, including rising inflation and a shift in industrial competitiveness, thereby influencing long-term economic strategies such as the pursuit of regional economic integration evident in the Canada-US Free Trade Agreement.