Question

Cost-push inflation is caused by supply shocks in the cost of production. Which of the following is one of the most famous supply shocks in American history?

a) The oil crisis of 1973

b) The Great Depression

c) The dot-com bubble burst

d) The housing market crash of 2008

Answer 1

The oil crisis of 1973 is one of the most famous supply shocks in American history that caused cost-push inflation.

Step-by-step explanation:

The most famous supply shock in American history is The oil crisis of 1973. During this time, there was a significant increase in oil prices due to the Organization of Arab Petroleum Exporting Countries (OAPEC) imposing an oil embargo on countries that supported Israel in the Yom Kippur War. This supply shock caused a significant increase in the cost of production, leading to cost-push inflation.