Use the following to answer question :
Figure: The Great Disinflation
-(Figure: The Great Disinflation) Look at the figure The Great Disinflation. In the early 1980s, the inflation rate was beaten down by the Federal Reserve's tight monetary policy. In the short run this policy led to a _____ level of actual output and a _____ rate of unemployment.

Question

Use the following to answer question :
Figure: The Great Disinflation 
-(Figure: The Great Disinflation) Look at the figure The Great Disinflation. In the early 1980s, the inflation rate was beaten down by the Federal Reserve's tight monetary policy. In the short run this policy led to a _____ level of actual output and a _____ rate of unemployment.

Quizplus · Accepted Answer

The figure shows that in the early 1980s, the inflation rate decreased while the unemployment rate increased. This suggests that the Federal Reserve's tight monetary policy led to a low level of actual output and a high rate of unemployment in the short run, making option B the best choice.

Use the Following to Answer Question