Question

What was a key element of Reagan's plan to meet the economic crisis in 1981?

Answer 1

First is A?   

Second is B?  

Hard questions.  

Answer 2

Answer #1:

a. raising interest rates to curb inflation

Answer #2:

a. increased inflation

Explanation:

The Reagan administration came into office with major economic problems to deal with in the United States.  It wasn't specifically President Reagan that raised interest rates; doing so is the job of the Federal Reserve.  But it was under President Reagan's watch that the raising of interest rates was pursued as a way of trying to control inflation.  As summarized by Zelkadis Elvi, writing an article for Yahoo Finance (November 22, 2013):  "In the early 1980s, the Federal Reserve was waging a war with inflation. In an effort to tame double-digit inflation, the central bank drove interest rates higher."  One of the results of the Feds moves to raise interest rates was that home ownership became more difficult.  Mortgage rates eventually reached over 18%.  But the economy did improve.

Another tool used in the Reagan years to deal with economic struggle was the the Economic Recovery Tax Act of 1981.  Tax rates were cut significantly in an effort to spur economic activity.