Question

What policies of the 1960s set the stage for the economic crisis of the 1970s?

Answer 1

The policies of the 1960s that set the stage for the economic crisis of the 1970s include the expansionary monetary and fiscal policies of the time, which led to high inflation rates and a rise in government spending. The Vietnam War also contributed to the economic crisis, as it led to a significant increase in government spending and a decline in the value of the dollar. Additionally, the oil embargo of 1973, which was a result of the Arab-Israeli War, led to a significant increase in oil prices, which further worsened the economic crisis.

Answer 2

For many observers, the use of Keynesian fiscal and monetary policies in the 1960s had been a triumph. That triumph turned into a series of macroeconomic disasters in the 1970s as inflation and unemployment spiraled to ever-higher levels.