ECONOMICS
FEDERAL RESERVE
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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President Nixon was impeached
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higher unemployment
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more jobs
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macroeconomics
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The Federal Reserve was shut down until inflation could be reduced
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Detailed explanation-1: -Unemployment rates rose, while a combination of price increases and wage stagnation led to a period of economic doldrums known as stagflation. President Nixon tried to alleviate these problems by devaluing the dollar and declaring wage-and price-freezes.
Detailed explanation-2: -Stagflation in the 1970s combined high inflation with uneven economic growth. High budget deficits, lower interest rates, the oil embargo, and the collapse of managed currency rates contributed to stagflation. Under Federal Reserve Board Chair, Paul Volcker, the prime lending rate was above 21% to reduce inflation.
Detailed explanation-3: -Between 1970-74, the average annual unemployment rate was 5.4 percent, while the average annual change in the Consumer Price Index (CPI) was 6.6 percent. From 1974-79, the figures edged up to 7.9 percent for unemployment and 8.1 percent for the CPI.
Detailed explanation-4: -Stagflation is an economic condition that’s caused by a combination of slow economic growth, high unemployment, and rising prices. Stagflation occurred in the 1970s as a result of monetary and fiscal policies and an oil embargo.