Question

This graph shows changes in gross domestic

product, which is the value of all goods and
services produced in a year.
Percentage changes in real US
GDP, 1970-1975, in 2005 dollars
Based on this graph, which of the following
describes the economy of the early 1970s?
The economy was growing steadily
The economy plummeted sharply in 1973
O The economy began to grow in 1974
DONE
1970 1971 1972 1973 1974 1975

Answer 1

After a period of steady increase, the economy plummeted sharply in 1973.

Answer 2

The economy plummeted sharply in 1973

Step-by-step explanation:

The economy actually grew in 1973 by 5.65%, but then it fell sharply, and fell byn -0.5 in 1974.

The reason for this drop was the 1973 oil crisis, after several Oil-exporting Arab Nations, launched an embargo against countries that had supported Israel in the Yom Kippur War, among these, the United States.

This embargo was very negative for the American economy, because the United States depended on these Arab Nations for its oil supply. Oil became scarce, which made energy, fuel, gasoline, and so on, more expensive. This naturally depressed economic activity because producing goods or services was now more expensive, or even impossible.