History of Macroeconomics The use of Keynesian policy to fine-tune the economy in the 1960s, led to disillusionment in the 1970s and early 1980s Stagflation occurs when the overall price level rises rapie idly(inflation) during periods of recession or high and persistent unemployment(stagnation)History of Macroeconomics The use of Keynesian policy to fine-tune the economy in the 1960s, led to disillusionment in the 1970s and early 1980s. Stagflation occurs when the overall price level rises rapidly (inflation) during periods of recession or high and persistent unemployment (stagnation)