The Main Reason the Government Relied on a Restrictive Monetary

question 12

Multiple Choice

The main reason the government relied on a restrictive monetary policy to fight inflation during the late 1970s was that

• A) such a policy was strongly urged during the 1974 economic summit conference called by President Ford.
• B) such a policy is the only proven method for fighting inflation and unemployment at the same time.
• C) unemployment was then viewed as a more serious problem than inflation, and such a policy could boost employment.
• D) most observers during that time felt that inflation was due to excessive demand, not shortages.
• E) the resulting increase in interest rates would stimulate investment and expanded output.

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Definitions:

Factory Floor

The area where workers manufacture products or operate machinery, typically within a manufacturing plant or factory.

Warehouse

A storage facility for housing goods in large quantities, typically before they are distributed for sale.

Return On Investment

A performance measure used to evaluate the efficiency or profitability of an investment, calculated as net profit divided by the cost of the investment.

Margin

The difference between the selling price of a product and the cost of the product, representing profitability.