Which of the following caused the the unemployment rate to rise to over 10 percent in 1983?
A) The increase in the number of illegal immigrants from Central and Latin America.
B) The Fed's contractionary response to inflation caused by the oil shocks.
C) Increase in tax rates implemented by Ronald Reagan in 1981.
D) The change in U.S. labor laws requiring firms to pay unemployment insurance to workers.

Question

Quizplus · Accepted Answer

The Fed's contractionary response to inflation caused by the oil shocks resulted in a hike in interest rates that made it expensive for businesses and consumers to borrow, thereby slowing down the economy and leading to an increase in the unemployment rate. The other options listed did not have significant impacts on the unemployment rate during that period.

Which of the Following Caused the The Unemployment Rate to Rise