The main reason the government relied on a restrictive monetary policy to fight inflation during the late 1970s was that
A) such a policy was strongly urged during the 1974 economic summit conference called by President Ford.
B) such a policy is the only proven method for fighting inflation and unemployment at the same time.
C) unemployment was then viewed as a more serious problem than inflation, and such a policy could boost employment.
D) most observers during that time felt that inflation was due to excessive demand, not shortages.
E) the resulting increase in interest rates would stimulate investment and expanded output.

Question

Quizplus · Accepted Answer

During the late 1970s, inflation was primarily attributed to excessive demand rather than shortages. A restrictive monetary policy, which involves reducing the money supply and increasing interest rates, was used to curb this demand, thereby addressing inflation.

The Main Reason the Government Relied on a Restrictive Monetary