Stagflation

Part 1: Describe and explain the various frugal factors responsible for provoking and exacerbating stagflation in the 1970s. Distinguish amongst policy based causes (fiscal, monetary, industrial, trade, other) and non-policy causes in your explanation. Answer: There were galore(postnominal) sparing factors contributed towards the great stagflation of 1970s. Some of the prominent policy tie in issues were, & falsify; Expansionary policies during the decade of 60: After enacting a tax cut in 1964 to stimulate economic growth and discharge unemployment, President Johnson and Congress launched a series of expensive municipal spending programs designed to alleviate poverty. • Political inveigle of former president Nixon and overheating of economy: As a part of political business cycle, Nixon imposed the expansionary target for national official Reserve during early 1970s, even when it was already track at dependable, in revision to keep it growing during resource age / before election days. This overheated the economy and triggered inflation. • plight and price controls: In 1971, to control the inflation, Nixon imposed price and ope prise controls in order to control inflation. This was an anti-inflation policy coincided with crude shock. This flow income from economy. • Dollar devaluation: In 1971, U.S. was also deviation prosperous standard, which was intended to allow U.S. dollar to fall. Compounding the post were much(prenominal) events as Fed Chairman Arthur Burns and the Committee on Interest and Dividends strenuously opposing banks attempting to raise the U.S. prime rank from 6% to 6.25% in February 1973. • Defense spending sum up: Fiscal spending increased during mid/late mid-sixties due to Vietnam war. A combination of expansionary monetary policy and intensify magnitude fiscal spending caused the inflation. • Stop/go flack of monetary policy throughout the decade: supply utilise contractionary ! policy in early 1973 to control inflation, the same division when oil shock...If you want to get a full essay, order it on our website: OrderCustomPaper.com

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