12. The Great Inflation was caused by A. falling oil prices and rising food prices. B. high unemployment and increased level of imports. C. shortages of gasoline and food and increased level of imports. D. government policies that increased economic activity and the money supply.

The correct answer is D. government policies that increased economic activity and the money supply.<br /><br />The Great Inflation refers to the period of high inflation that occurred in the United States during the 1970s. It was primarily caused by government policies that increased economic activity and the money supply. During this time, the U.S. government implemented expansionary fiscal and monetary policies, which led to an increase in the money supply and a subsequent rise in inflation. This period of high inflation was characterized by rising prices for goods and services, as well as a decline in the purchasing power of the dollar.