What do many economists think contributed to the over 13 percent inflation rates experienced by the United States in the 1980s?
A) The Fed was inflexible in its rule of 3 percent growth.
B) The Fed did not do enough to increase money supply.
C) The Fed overstimulated the economy with too much money in the 1970s.
D) The Fed did not react to the oil shocks of the 1970s.

Question

Quizplus · Accepted Answer

Many economists believe that the over 13 percent inflation rates experienced by the United States in the 1980s were largely due to the excessive money supply growth in the 1970s, which was a result of the Fed's expansionary monetary policy. This led to a surge in demand and higher prices, which continued into the 1980s. The Fed then had to tighten its monetary policy in the 1980s to combat inflation, which led to a recession in the early part of that decade.

What Do Many Economists Think Contributed to the Over 13