Why Did Many Economists During the 1960s and 1970s  Believe That

question 110

Multiple Choice

Why did many economists during the 1960s and 1970s  believe that expansionary macroeconomic policy that resulted in inflation would reduce the rate of unemployment?

• A) They failed to realize that the expansionary policy would stimulate aggregate demand.
• B) They failed to realize that the expansionary policy would reduce real interest rates.
• C) They failed to incorporate expectations into their analysis.
• D) They thought that money growth would simply lead to a proportional increase in the price level.

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