As a former chair of the Federal Reserve's board of governors, Paul Volcker pursued a _____ monetary policy, which:
A) loose; escalated inflation and reduced policy credibility for the Fed.
B) loose; reduced inflation and established policy credibility for the Fed.
C) tight; escalated inflation and reduced policy credibility for the Fed.
D) tight; reduced inflation and established policy credibility for the Fed.

Question

Quizplus · Accepted Answer

Paul Volcker is known for implementing a tight monetary policy during his tenure as the chair of the Federal Reserve's board of governors. This policy was aimed at reducing high levels of inflation that were present in the late 1970s and early 1980s. By increasing interest rates, Volcker's approach successfully lowered inflation and helped to restore the Federal Reserve's credibility regarding its ability to control inflation.

As a Former Chair of the Federal Reserve's Board of Governors