The Federal Reserve believed that the productivity slowdown in the 1970s was a long-lived recession and therefore increased the supply of money.

Question

Quizplus · Accepted Answer

The Federal Reserve increased the supply of money in the 1970s primarily to combat recession and high unemployment, not because it believed the productivity slowdown was a long-lived recession. The increase in money supply inadvertently contributed to the high inflation of the period.

The Federal Reserve Believed That the Productivity Slowdown in the 1970s