In 1979, the CPI Rose 13

Multiple Choice

In 1979, the CPI rose 13.5%, the highest inflation rate recorded in the twentieth century in the U.S. Public opinion polls in 1979 consistently showed that most people regarded inflation as the leading problem facing the U.S. How did the Fed respond to this situation?

A) It continued to pursue expansionary policies to avert a potential recession caused by rising oil prices.
B) It switched from discretionary monetary policy to a fixed money growth rate rule where the growth rate was under 3%.
C) It pursued contractionary policies with the primary goal of lowering inflation.
D) It adopted a hands-off approach, relying on the economy's self correcting mechanism to lower inflation.