The Kennedy-Johnson guidelines broke down in the late 1960s because of
A) strong demand-side inflation.
B) the symptoms of deflation.
C) increases in aggregate supply.
D) price decreases by big firms.
E) labor union wage restraints.

Question

Quizplus · Accepted Answer

The Kennedy-Johnson guidelines were designed to prevent inflation through voluntary wage and price restraints. However, in the late 1960s, there was a strong demand-side inflation, which means that there was too much money chasing too few goods, leading to an increase in prices. This made it difficult for the guidelines to be effective, ultimately leading to their breakdown.

The Kennedy-Johnson Guidelines Broke Down in the Late 1960s Because