The primary factor that caused some economists to lose their faith in the Keynesian approach to macroeconomic policy was
A)the high levels of unemployment that occurred during the Great Depression.
B)the presence of both high unemployment and high inflation during the 1970s.
C)theoretical proof that Keynes's ideas were invalid.
D)evidence that Keynes's ideas were useful during economic recessions, but not during economic booms.

Question

Quizplus · Accepted Answer

The presence of both high unemployment and high inflation during the 1970s, known as stagflation, contradicted Keynesian theory, which stated that inflation and unemployment had an inverse relationship. This led some economists to lose faith in the approach.

The Primary Factor That Caused Some Economists to Lose Their