Case Study : The Great Inflation Essay

The 1970s was an extremely interesting decade when it comes to the political history and social issues. Many things have occurred to ensure that. The decade was full of things that made a huge impact on the social view of the United States along with the country political views. According to History.com, this decade was a tumultuous time. It was a continuation of the previous decade, the 1960s. In many ways the 1970s made an enormous impact on America.

Another cause for the decline in oil prices is caused by an increase in consumers purchasing more fuel efficient vehicles, such as hybrid or electric vehicles. In many countries today, especially in North America, there has been an increased demand for fuel efficient vehicles. This is evident in TV commercials which are advertising more and more vehicles that get 40 to 50 miles per gallon, and by the ever increasing commercials for electric vehicles. Consumers are tired of paying outrageous prices for oil and are demanding more for their money. As this demand continues to grow, the demand for oil will decrease.

alcohol during the prohibition. The price skyrocketed. As the penalties for breaking the law increased, so did the demand and price.

Many people flocked to oil rich places to make money, but few truly had a big break. All the new businesses that came with it made higher demand for many goods and services.

1. What is inflation? Inflation is an increase in prices for goods and services (What is Inflation?).

Oil price increases are generally thought to increase inflation and reduce economic growth. In terms of inflation, oil prices directly affect the prices of goods made with petroleum products. As mentioned above, oil prices indirectly affect costs such as transportation, manufacturing, and heating. The increase in these costs can in turn affect the prices of a variety of goods and services, as producers may pass production costs on to consumers. The extent to which oil price increases lead to consumption price increases depends on how important oil is for the production of a given type of good or service.

Ronald Reagan once said, “ In a world wracked by hatred, economic crisis, and political tension, America remains mankind's best hope.”America may be mankind’s best hope, but will it remain that way? America is the beacon for freedom and equality, but with the recent election, it may difficult for us to remain a country full of diversity and hope. In order for the United States economy to prosper, the government must control inflation rates, raise employment rates, and change the current income inequality ratio.

During the 1970’s America hit rock bottom. The U.S. had lost the Vietnam war, there was an oil crisis, and the automobile industry was going out of business due to the foreign cars. The Vietnam war gave rise to many anti-war protests and questioning of the nation’s role in the world. Many believed in pacifism and opposed of the U.S. involvement in the war. The oil embargo that members of the Organization of Arab Petroleum Exporting Countries proclaimed in 1973 led to oil shortages. Gas had to be rationed and prices increased drastically. Japan and Germany were making better cars which caused U.S. automobile industries to go out of business, many Americans lost their jobs.

Additionally, the war in the middle east created a suspension in the export of oil to the U.S, and it quadrupled the price of oil. I think that our leaders

The Great Depression, which for the most part is considered to have started in October 1929 with the stock market crash, changed the way America worked. Toward the end of the Roaring Twenties when stock markets and the economy took off, the crash seemed unavoidable everything considered. A more significant number of goods were being manufactured than were wanted, and without individuals to get them, jobs vanished. The occasion was a piece of a winding that finished with the creation of materials for World War II. Deflation, the inverse of inflation, happens when the fundamental value of money goes up. At the point when excessively numerous merchandise is accessible, the cost goes down, so the money essentially is worth

In the 1970s and 1980s the Canadian economy was plagued by issues of inflation and unemployment, or stagflation, as it came to be known. It is generally believed the “severe years of surging inflation and unemployment were the result of the first (1973-1974) and second oil shocks (1979-1980), and the double digit inflation rates in many countries (though not all) that provoked the sense of crisis in these years were caused by the high price of energy, a major factor input” (LK, 2011). However, it is clear that inflation was already a problem in Canada prior to these oil shocks. What caused the inflation in the 1970s is of some debate; but it most likely resulted from the overly-expansionary monetary policies employed by the Bank of Canada;

It widely recognized that the monetary policy within a country should be primarily concerned with the pursuit of price stability. However, it is still not clear how this objective can be achieved most effectively. This debate remains unsettled, but an increasing number of countries have adopted inflation targeting as their monetary policy framework. (Dr E J van der Merwe, 2002) This topic of Inflation targeting is a subject which immediately conjures different perceptions from different people. Many feel that low inflation should be a main aim of monetary policy, while others (such as trade union activists) believe that a higher growth rate to stimulate jobs should be the main concern.

Why is inflation bad for the American economy? Imagine going into the popular local food market or gas station several times a week. After a couple of weeks, imagine going into these stores and noticing the prices have steadily increased over the past few months. This is called inflation, and it is causing many problems in the United States. There are three different types of inflation: demand-pull, cost-push, and built-in. Demand-pull inflation occurs when prices increased because of such high demand. Cost-push inflation is when prices surge resulting from high input costs. Built-in inflation is when prices continue to rise after any natural causes. The inflation occurring in America is a demand-pull. Inflation has affected the United

A lot of literatures have already studied about the inflation and inflation prediction and in this paper literature review will be discussed from the theoretical aspect and empirical aspect. The researches of the inflation, which are studied, by a lot of scholars in the field of economics have been conducted for a long time especially during the 1970s and it is the heyday when people would like to pay more attention to research the inflation. The inflation has become a hot topic among the economic life and social life since 1987. However, no matter whether it is in the western economic field or in the Chinese economic field, people have different definitions on the inflation and so far there is no unified opinion and conclusion can be accepted generally by everyone. For example, Wyplosz and Burda (1997), Blanchard (2000), and Barro (1997) define that inflation is a sustained rising in the overall price level of products and services in an economy throughout the time period. By contrast, Zha and Zhong (2016) define that inflation is considerable as the mechanism to improve economic growth. In general, the common definition of the inflation is that the inflation is a continuous rising process in the aspect of price. In other words, the value of the currency decreases continually.

I Poonam Pillai hereby declare that the term paper report titled study on Inflation in India that I have submitted is original. I was in regular contact with nominated guide and contacting him for discussing the project.