During the stagflation triggered by the OPEC price hikes in the 1970's, central banks increased the money supply because

Question

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Central banks increased the money supply during the stagflation of the 1970s because they initially misinterpreted the situation as a negative demand shock, rather than a negative supply shock caused by the OPEC price hikes. This misunderstanding led them to adopt expansionary monetary policies to stimulate demand, which was not the appropriate response to a supply-side problem.

During the Stagflation Triggered by the OPEC Price Hikes in the 1970's