What Do Many Economists Think Contributed to the Over 13

question 108

Multiple Choice

What do many economists think contributed to the over 13 percent inflation rates experienced by the United States in the 1980s?

• A) The Fed was inflexible in its rule of 3 percent growth.
• B) The Fed did not do enough to increase money supply.
• C) The Fed overstimulated the economy with too much money in the 1970s.
• D) The Fed did not react to the oil shocks of the 1970s.

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Definitions:

Contract

A legally binding agreement between two or more parties that outlines obligations and rights of those involved.

Compounded Annually

Interest that is calculated once a year and added to the principal, which then earns interest the following year.

Investment

The act of allocating resources, usually money, in the expectation of generating an income or profit.

Compounded Annually

Interest on an investment or loan calculated once a year, where the interest is added to the principal.