Inflation started to creep up in the late 1960's. By 1968, inflation was about 4%, and by 1973, inflation was about 6%. By 1980, inflation was at 13.5%. The Fed, led by Chairman Paul Volcker, engineered a recession that eventually disinflated the economy. Using the economic the concepts learned in class, especially the economics fluctuations model, explain how the Fed disinflates the economy from 13.5% to 3.5%, and what the effects of that disinflation are in the SR and the LR. You cannot draw graphs here, so you will need to explain the model and the shifts in words. Be thorough. (The answer should contains 200 words)
Inflation started to creep up in the late 1960's. By 1968, inflation was about 4%, and by 1973, inflation was about 6%. By 1980, inflation was at 13.5%. The Fed, led by Chairman Paul Volcker, engineered a recession that eventually disinflated the economy. Using the economic the concepts learned in class, especially the economics fluctuations model, explain how the Fed disinflates the economy from 13.5% to 3.5%, and what the effects of that disinflation are in the SR and the LR. You cannot draw graphs here, so you will need to explain the model and the shifts in words. Be thorough. (The answer should contains 200 words)
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Inflation started to creep up in the late 1960's. By 1968, inflation was about 4%, and by 1973, inflation was about 6%. By 1980, inflation was at 13.5%. The Fed, led by Chairman Paul Volcker, engineered a recession that eventually disinflated the economy. Using the economic the concepts learned in class, especially the economics fluctuations model, explain how the Fed disinflates the economy from 13.5% to 3.5%, and what the effects of that disinflation are in the SR and the LR. You cannot draw graphs here, so you will need to explain the model and the shifts in words. Be thorough.
(The answer should contains 200 words)
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