When the Volcker disinflation began,
A)the rate of inflation rose to over 20 percent.
B)the rate of inflation fell to 1 percent.
C)the federal funds rate had risen above 20 percent.
D)the federal funds rate fell to 2 percent.
E)the rate of inflation became negative.

Question

Quizplus · Accepted Answer

The Volcker disinflation began in the late 1970s and early 1980s, during which the Federal Reserve raised the federal funds rate to combat high inflation. As a result, the federal funds rate had risen above 20 percent, making choice C the correct answer. The rate of inflation did fall significantly during this period, but it never became negative, making choices A, B, and E incorrect.

When the Volcker Disinflation Began