The Great Inflation of the 1970s in the United States Term Paper

The Great pomposity of the 1970s in the coupled States - Term Paper ExampleFrom this research it is clear that the Great Inflation of the 1970s was a time period that epitomized the United States struggle with double-digit inflation invests beginning early in the 1970s until early 1980s. As asserted by many authors and in many literatures, post World War II economists and politicians toyed with plastered ideas proposed by Keynesian economics. According to this type of economics, it is possible to trade off inflation and employment to touch some economic stability and growth, albeit for a short-term objective. According to this school of thought, small amounts of inflation could be allowed to help lower unemployment rates, thereby, attaining grittyer overall economic output. The main weakness of the Keynesian economics was that patronage the fact that inflation may lead to increased employment such a strategy l mavensome(prenominal) has short-term effects. For example, a lot of cash in circulation results in boosted demand for goods and services and a like drop in interest rates. Interestingly, people always mistake this influx in money leave with wealth, thus, increase their spending and demand for goods and services. Unfortunately, it would later require a higher rate of inflation to happen upon the same economic effects. In the case of the Great Inflation of the 1970s, the United States was experiencing both high unemployment and inflation, a situation that the Keynesian economists would somehow consider impossible. ... ore, although a central bank may tirelessly get wind to formulate and implement monetary policies that would curb inflation, the immediate negative economic effects of these policies and political pressures storm most central banks relenting and inflation returning (Bulkley, p135). Simply put, inflation refers to a general increase in the prices of goods and services and/or cost of living over a given period. Accompanying this incr ease in prices is the weakening of a currency, implying that such a currency buys fewer items than before the inflation. In other words, the get power of a currency is reduced day by day, which is measured by the rate of inflation. The rate of inflation is the percentage change in the general price index, calculated as an annual figure. Although a high inflation rate is bad for an economy, a zero or a negative one is equally bad unlike a low inflation rate, which is beneficial to a country. For instance, a high inflation is found to interfere with the behaviors of consumers who may want to buy their requirements in advance, fearing further increases in goodness prices (White, p10). This consumer behavior has an effect of stabilizing the market by way of creating preventable shortages. This paper explores the Great Inflation of 1970s in the United States concerning its background, effects, causes, and the monetary policies in the preceding and succeeding years. The Great Depression close to scholars, economists and historians have described the Great Inflation of the 1970s as one of the biggest economic gaps in the write up of not only the United States but also of other countries around the world. Also described as the biggest domestic blunder ever for the United States, the Great Inflation of the 1970s played a kinda central role in the