Essay about 1980 s Double Dip Recession

1407 WordsNov 19, 20146 Pages
1980’s Double Dip Recession Overview I. Introduction The 1980-1982 Double Dip recession brings up the curiosity of how the stagflation of the seventy’s affected the early eighty’s in which it caused the Fed and the USA congress to be switching back and forth from stimulus and restraints causing us to fall to our first recession. Then not till later we will see that Paul Voucher Chairman of the Board of Governors use heavy monetary restraints to control the inflation and ending the first recession only to ending up pushing us back into the second recession of our Double Dip. II. Cause of the Recession The high inflation rates that started climbing since the year of 1976 was one of the underlying components of the first recession in 1980…show more content…
Which caused the United States to enter the second dip of the recession to happen since the high inflation rates caused the businesses to stop investing more during the times of 1980 through 1982 (Thayer Watkins Syllabus website). Also the decisions of the Nixon Presidential time made its decision of tackling inflation no matter what no matter what the unemployment also might be since they couldn’t take both at the same time (Secrets of the Temple: How the Federal Reserve Runs The Country from http://www.investopedia.com/articles/economics/09/1970s-great-inflation.asp). This decision then also made the both the Fiscal and Monetary Policies to focus on Inflation causing the U.S. to go into the first recession of the double dip due to high inflation then also because of fiscal restraints put in play by the legislature and president. This caused a drop in aggregate Demand since higher inflation cost makes it go decrease and increases the unemployment. III. Fiscal Policy The Reagan years of presidential election started to spend much more money on military defense increasing its spending on those assets trying to boost up the aggregate demand since the Recessions of aggregate demand decreases and government spending can help the demand line not fall down to low levels. They used a lot of stimulus packages to cutting tax rates and helping the wealthy cut their taxes to new lows of around 28% a steep decrease from the previous year average of 70% taxes this indeed

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