In order to combat stagflation, neoliberal supporters of supply-side economics like British Prime Minister Margaret Thatcher (Conservative party), U. S. President Ronald Reagan (Republican party), and West Germany's Chancellor Helmut Kohl (Christian Democratic party) advocated

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Anne Smith

1 January, 21:24

In order to combat stagflation, neoliberal supporters of supply-side economics like British Prime Minister Margaret Thatcher (Conservative party), U. S. President Ronald Reagan (Republican party), and West Germany's Chancellor Helmut Kohl (Christian Democratic party) advocated

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Clayton Key · Answer 1

Stagflation is characterized by three things: high inflation, high unemployment, and low economic growth.

Thatcher, Reagan and Kohl, promoted the following policies to end stagflation:

To end high inflation, they adopted the monetarist view (developed by Milton Friendman) in which the high growth in the money supply was the culprit. The central banks of these countries began to focus on keeping inflation low, and to achieve this, began to reduce the money supply. To end high unemployment and low economic growth, they promoted the adoption of supply-side economic policies: lower taxes and less regulations so that firms were able to invest more, boost economic growth, and hire more people.