Which of the following contributed to the increase in the unemployment rate in 1983?
A) The Fed actively tried to increase inflation via contractionary policies.
B) The Fed actively tried to make the US dollar depreciate via contractionary policies.
C) The Fed actively tried to reduce inflation via contractionary policies.
D) The Fed actively tried to make the US dollar appreciate via contractionary policies.

Question

Quizplus · Accepted Answer

The increase in the unemployment rate in 1983 was due to the Federal Reserve's contractionary policies aimed at reducing inflation. These policies included raising interest rates, which made it more expensive for businesses to borrow money and slowed down economic growth, leading to higher unemployment. Options A, B, and D all involve the Fed using contractionary policies, but they have different objectives that are not relevant to the increase in the unemployment rate in 1983.

Which of the Following Contributed to the Increase in the Unemployment