In 1979 and 1980, the U.S. economy was faced with stagflation. Policymakers decided to focus on reducing _____, which caused _____ temporarily to rise even further.

Question

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In the late 1970s and early 1980s, the U.S. was experiencing stagflation, a combination of high inflation and high unemployment. Policymakers, particularly the Federal Reserve under Chairman Paul Volcker, decided to prioritize fighting inflation by raising interest rates. This policy did lead to a reduction in inflation but also caused unemployment to rise in the short term, as higher interest rates slowed economic activity.