What was the supply-side diagnosis of stagflation?
A)It was triggered by the high price of imported oil and accentuated by declining productivity rates.
B)It was triggered by the stock market crash and accentuated by the low price of imported oil.
C)It was triggered by the stock market crash and accentuated by declining productivity rates.
D)It was triggered by the stock market crash and accentuated by the high price of imported oil.

Question

Quizplus · Accepted Answer

The supply-side diagnosis of stagflation was that it was triggered by the high price of imported oil and accentuated by declining productivity rates. This meant that the economy was experiencing high inflation (due to the high cost of oil) and low economic growth (due to declining productivity). Supply-side economists argued that the solution was to lower taxes and reduce government regulation to stimulate production and increase productivity.

What Was the Supply-Side Diagnosis of Stagflation