The disinflation experiment reduced inflation in the United States, but at the cost of:
A) an increase in the long-run growth rate of the economy.
B) high unemployment.
C) high inflation.
D) deflation.

Question

Quizplus · Accepted Answer

The disinflation experiment aimed to reduce inflation rates in the United States by tightening monetary policy. However, this led to a period of high unemployment as economic activity slowed down. Therefore, the cost of the disinflation experiment was high unemployment.

The Disinflation Experiment Reduced Inflation in the United States, but at the Cost