Why were Johnson's 10 percent surtax and Nixon's price-control program ineffective in controlling the inflationary pressures they were designed to stop?
A) Both programs were based on the assumption that the aggregate supply was horizontal.
B) Both presidents misread the economic signs of the times that clearly pointed to no inflationary pressures.
C) Both were temporary in nature and so did little to deal with strong inflationary expectations.
D) These measures never received the approval or support of the Council of Economic Advisers.
E) The inflationary pressures had subsided by the time these programs were enacted.

Question

Quizplus · Accepted Answer

Both Johnson's 10 percent surtax and Nixon's price-control program were temporary measures designed to deal with short-term inflationary pressures. However, they did nothing to address the strong inflationary expectations that were already embedded in the economy. As a result, they were largely ineffective in controlling inflation.

Why Were Johnson's 10 Percent Surtax and Nixon's Price-Control Program