From 1979 to 1982, the Federal Reserve System:
A) followed monetarist policy suggestions.
B) initiated a sharply expansionary monetary policy.
C) pursued a policy that shifted AD to the right.
D) fell into the liquidity trap.

Question

Quizplus · Accepted Answer

From 1979 to 1982, the Federal Reserve System followed monetarist policy suggestions, which emphasized the control of the money supply to stabilize the economy. This resulted in a shift towards tighter monetary policy and higher interest rates, which contributed to a recession in 1980-1982.