The stagflation of the early 1970s was the result of
A) expansionary aggregate demand policies and an increase in expected inflation.
B) expansionary aggregate demand policies and a decrease in expected inflation.
C) contractionary aggregate demand policies and a decrease in expected inflation.
D) expansionary aggregate demand policies.

Question

Quizplus · Accepted Answer

The stagflation of the early 1970s was caused by expansionary aggregate demand policies, which led to higher inflation, and an increase in expected inflation, which further exacerbated the situation by making inflation harder to control.

The Stagflation of the Early 1970s Was the Result of