The restrictive monetary policy followed by the Fed in the early 1980s
A)reduced both unemployment and inflation.
B)reduced inflation significantly,but at the cost of a severe recession.
C)reduced unemployment significantly,but at the cost of higher inflation.
D)raised both unemployment and inflation.

Question

Quizplus · Accepted Answer

The restrictive monetary policy followed by the Fed in the early 1980s led to a significant reduction in inflation, but at the cost of a severe recession. The Fed raised interest rates to reduce inflation, which led to a sharp increase in unemployment and a decline in economic output before inflation finally subsided.

The Restrictive Monetary Policy Followed by the Fed in the Early