Because the Carter credit controls of 1980 were unexpected and imposed by the government, we can conclude that
A)the subsequent decline in demand for bank loans most likely caused the 1980 recession.
B)the subsequent decline in bank loans was the result of a shift in bank loan supply that was independent of any shift in bank loan demand.
C)the subsequent decline in the supply of bank loans was most likely caused by the 1980 recession.
D)the controls led to an increase in the demand for money.

Question

Quizplus · Accepted Answer

The Carter credit controls of 1980, being unexpected and government-imposed, directly affected the supply side of bank loans by restricting how much banks could lend, rather than affecting the demand side from borrowers. This means the decline in bank loans was due to a shift in the supply of bank loans, not because of a change in how much borrowers wanted to take out loans.

Because the Carter Credit Controls of 1980 Were Unexpected and Imposed