During the 1970s,demand-management policy
A)continued to be highly successful in curing the economy's economic problems
B)was found to be highly unsuitable in periods of stagflation such as the decade of the 1970s
C)was so unsuccessful that economists advised a return to the pre-World War II philosophy of fiscal policy
D)was unsuccessful because the automatic stabilizers no longer influenced the economy
E)was unsuitable because it affected aggregate supply more than aggregate demand

Question

Quizplus · Accepted Answer

Demand-management policy, which focused on using monetary and fiscal policy tools to control aggregate demand, was found to be highly unsuitable in the period of stagflation in the 1970s. Stagflation was a combination of high inflation and high unemployment, which was not effectively addressed by demand-management policy. As a result, economists began to question the effectiveness of this policy approach and advocated for alternative policies such as supply-side economics.

During the 1970s,demand-Management Policy