The High Rates of Inflation That Were Experienced in the 1970s

question 29

Multiple Choice

The high rates of inflation that were experienced in the 1970s could partly be blamed on all of the following except:

• A)the assumption the economy would continue to grow at the rates that the economy experienced in the 1960s.
• B)the Vietnam war.
• C)high oil prices.
• D)rapid growth rates of potential GDP during the 1970s.

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Definitions:

Financial Intermediaries

Firms that accept deposits from savers and use those deposits to make loans to borrowers.

Savings and Loan

Financial institutions primarily engaged in accepting savings deposits and making mortgage and other loans to the public.

FDIC

The Federal Deposit Insurance Corporation, a U.S. government agency that insures deposits at banks and thrift institutions to maintain public confidence and financial stability.

Savings and Loan Debacle

A financial crisis in the United States during the 1980s and 1990s involving the failure of savings and loan associations, largely due to risky business practices.