Prior to the stagflation of the 1970s, Liberals proclaimed that deficit spending produced inflation, rising interest rates, and decreased investment.

Question

Quizplus · Accepted Answer

Prior to the stagflation of the 1970s, it was generally believed, especially among Keynesian economists, that deficit spending could help manage economic downturns without necessarily leading to inflation. The experience of stagflation, which combined high inflation with high unemployment, challenged these views and led to a reevaluation of economic policies.

Prior to the Stagflation of the 1970s, Liberals Proclaimed That