ECONOMICS
FEDERAL RESERVE
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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In the 1910s because of the US trade deficit
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In the 1990s because of Globalization
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In the 1970s because of high inflation
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In the 1930s because of high unemployment
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Detailed explanation-1: -Supply-side economics rose in popularity among Republican Party politicians from 1977 onwards. Prior to 1977, Republicans were more split on tax reduction, with some worrying that tax cuts would fuel inflation and exacerbate deficits.
Detailed explanation-2: -The 1970s saw some of the highest rates of inflation in the United States in recent history. In turn, interest rates rose to nearly 20%. Fed policy, the abandonment of the gold window, Keynesian economic policy, and market psychology all contributed to the high inflation.
Detailed explanation-3: -The recession in the United States lasted from November 1973 (the Richard Nixon presidency) to March 1975 (the Gerald Ford presidency), and its effects on the US were felt through the Jimmy Carter presidency until the mid-term of Ronald Reagan’s first term as president, characterized by low economic growth.
Detailed explanation-4: -The stagflation of the 1970s, a combination of slow growth and rapidly rising prices, challenged prior assumptions, leading economists to examine the causes and policies that would end the stagnant period.
Detailed explanation-5: -Stagflation occurred in the 1970s as a result of monetary and fiscal policies and an oil embargo. Concern about stagflation has emerged as economic growth cools and inflation remains high amid the COVID-19 recovery.