Disinflation in the 1980s was a result of:
A) leftward shifts in the aggregate demand curve due to money supply reductions.
B) leftward shifts in the aggregate supply curve due to sticky wages and prices.
C) leftward shifts in the LRAS curve due to negative real shocks.
D) rightward shifts in the LRAS curve due to positive real shocks.

Question

Quizplus · Accepted Answer

Disinflation in the 1980s was primarily a result of deliberate monetary policy actions by central banks, notably the Federal Reserve in the United States, to reduce the money supply. This action led to leftward shifts in the aggregate demand curve, which decreased inflation by reducing the overall demand for goods and services in the economy.

Disinflation in the 1980s Was a Result Of