Stagflation Quiz

Which of the following statements is MOST accurate? Stagflation is:

• a phenomenon peculiar to the U.S., first observed during the 1960s.
• a worldwide phenomenon, first noted by the classical economists.
• an accepted part of American and European economics since the turn of the century.
• a condition common to numerous industrialized nations since the early 1970s.

The term “income policy” is another name for:

• wage and price guidelines.
• economic sanctions.
• welfare programs.
• fiscal policy.

As a result of the 1962 confrontation between President Kennedy and the steel industry, U.S. Steel ultimately:

• won the right to set prices without government interference.
• lost a major share of its market to other industry rivals.
• became the new industry price leader by setting voluntary limits on annual price increases.
• had to rescind price increases when other steel producers failed to follow its lead.

During the early 1970s, UAW workers insisted upon COLAs: cost of living adjustment contracts. Which of the following probably BEST describes the results of that decision?

• Virtually all workers benefited, with the long-awaited cost of living increases that improved lifestyles throughout the industry.
• Only a handful of workers benefited since the COLAs were not granted universally.
• Initially, many workers benefited from higher salaries, but as the industry laid-off workers to cut costs, many suffered.
• The auto industry was the real beneficiary since the COLAs gave it the excuse it needed to cut labor costs and raise profits.