By the time Paul Volcker took office as the new Federal Reserve chairman in 1979, the inflation rate exceeded 10%. By the end of 1986 the inflation rate had been brought down to 1.9%. Which of the following is true about the Volcker Disinflation?
A) lower inflation resulted from a tightening of monetary policy
B) by raising the federal funds rate to over 20%, the Federal Reserve stimulated the economy resulting in lower levels of both inflation and the unemployment rate by the early 1980s
C) the unemployment rate was brought down by 1982 but it took longer to reach lower inflation rates
D) all of the above
E) none of the above
A
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From an economist's perspective, why are public restrooms often dirtier than restrooms in your home?
A. Restrooms in your house are easier to clean. B. Property rights give you an incentive to clean your restrooms. C. There are incentives like a salary for janitors to clean the public restrooms. D. More people use the public restrooms.
If the nominal interest rate is less than the equilibrium nominal interest rate determined in the money market, then households and firms
A) are holding less money than they prefer. B) are holding more money than they prefer. C) expect real GDP to increase. D) expect the price level to increase. E) expect the nominal interest rate to decrease.
According to the Coase Theorem, so long as property rights are established and transactions costs are low, plaintiffs in court cases involving externalities will not care which way a judge decides.
Answer the following statement true (T) or false (F)
The market supply curve of a resource is
a. downward sloping b. upward sloping c. horizontal at the market price d. vertical e. determined by firms