Final answer:
Gerald Ford faced the primary economic challenge of stagflation upon taking office, leading to policies like the 'Whip Inflation Now' campaign and later, efforts to stimulate the economy while being cautious of inflation.
Step-by-step explanation:
The main problem with the economy when Gerald Ford took office was stagflation, a troubling combination of high inflation and unemployment, leading to a stagnant economy. Ford established policies to tackle the country's economic troubles, such as the 'Whip Inflation Now' (WIN) campaign.
This grassroots effort encouraged discipline in consumption and increased savings, but it was largely ineffective. As the recession became more prominent, Ford shifted towards strategies to stimulate the economy, albeit cautiously, to avoid further inflation.
However, his vetoes of a number of nonmilitary appropriations bills to prevent increasing the budget deficit gave an image of insensitivity to the plight of the working-class, drawing parallels to Herbert Hoover and the Great Depression.
Despite abandoning the gold standard earlier under Nixon to allow more economic flexibility, the economy had only worsened leading up to Ford's term, experiencing chronic energy shortages and a depressed economy.
The combination of high inflation, which exceeded 10 percent, and unemployment issues made economic policy a central issue for voters.
The knock-on effects of these policies were increased borrowing costs and a reduction in consumer spending. This set the stage for the economic challenges that faced Ford's and subsequent administrations.