By the Time Paul Volcker Took Office as the New

Multiple Choice

By the time Paul Volcker took office as the new Federal Reserve chairman in 1979,the inflation rate exceeded 10%.By the end of 1986 the inflation rate had been brought down to 1.9%.Which of the following is true about the Volcker Disinflation?

A) lower inflation resulted from a tightening of monetary policy
B) by raising the federal funds rate to over 20%,the Federal Reserve slowed the economy and was able to cut inflation in half by 1982 at the cost of a substantial hike in the unemployment rate causing a recession
C) this policy induced a substantial negative output gap
D) all of the above
E) none of the above