In 1971, under president richard nixon, the federal government passed legislation that "froze" wages and the prices of consumer

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1 year ago

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In 1971, under president richard nixon, the federal government passed legislation that "froze" wages and the prices of consumer

items. however, that did little to stop the increase in inflation or unemployment. what can you infer was behind nixon's decision to "freeze" wages and prices? workers would be willing to be paid less if it would help the economy. consumers would buy more if inflation continued to rise. inflation affects wages and prices, so freezing those would halt inflation. rising inflation would lead to improvements in unemployment.

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2 answers:

Tresset [83] · Answer 1 · 2023-12-12T15:16:48+03:00

Tresset [83]1 year ago

5 0

Answer:C

Explanation:edge 2022

kicyunya [14] · Answer 2 · 2023-12-12T13:56:38+03:00

The idea behind Nixon's decision to "freeze" wages and prices was inflation affects wages and prices, so freezing those would halt inflation.

When the total demand (AD) exceeds the total supply (AS) of a given item or service in the market, this is referred to as inflation.

As a result, the cost of those goods and services rises. This occurs as a result of people having money, either through high government spending or from high incomes or low loan rates.

Nixon thus decides to maintain a specific level of prices and salaries in order to freeze employment. As a result, the population's purchasing power will be constrained, and prices will eventually balance out.