The Recession of 1973-1975 Was Unusual in That Both Inflation

question 130

Multiple Choice

The recession of 1973-1975 was unusual in that both inflation and unemployment increased at the same time.This suggests that the primary cause of the recession was an

• A)inward shift of the aggregate demand curve.
• B)outward shift of the aggregate supply curve.
• C)inward shift of the aggregate supply curve.
• D)outward shift of the aggregate demand curve.

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Definitions:

Trend Component

An underlying pattern in a time series data set that shows the direction and pace at which the series values change over time.

Exponentially Smoothed Values

Values obtained using exponential smoothing, a technique to forecast data by giving more weight to recent observations.

Motor Oil Sales

The commercial activity of selling oil used for lubricating the engines of vehicles.

Exponentially Smoothed Sales

A forecasting technique that applies weighting factors which decrease exponentially over time, used to smooth time series data.