The high rates of inflation in the late 1970s and early 1980s fell primarily because of
A) a severe recession brought on by a tight monetary policy.
B) an easy money policy tied to a large federal deficit.
C) price and wage controls.
D) incomes policies.
E) sharp increases in federal tax rates.

Question

Quizplus · Accepted Answer

The high rates of inflation in the late 1970s and early 1980s fell primarily because of a severe recession brought on by a tight monetary policy. The Federal Reserve increased interest rates to curb inflation, which led to a decrease in spending and investment, causing a recession. As a result, inflation fell from double-digits to single-digits by the mid-1980s.

The High Rates of Inflation in the Late 1970s and Early