Which macroeconomic theory gained strength during the 1970's as the country grappled with unprecedented inflation coupled with the supply “shocks” of increasing oil prices?

Question

Supply-side economics
Laissez-faire economics
Monetarism theory
Keynesian Economics

Answer 1

The macroeconomic theory that gained strength during the 1970s, as the country dealt with unprecedented inflation and supply shocks like increasing oil prices, was Monetarism theory. This theory, associated with economist Milton Friedman, emphasized the role of governments in controlling the amount of money in circulation and its impact on inflation. Monetarism gained traction as traditional Keynesian policies struggled to address the unique economic challenges of the time, particularly the phenomenon of stagflation, where inflation and unemployment coexisted.