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ECO 202Final Project: Macroeconomic Analysis of the US in the 1950s ECO 202Peter Errera
ECO 2021950’s U.S. Economic History Overview•Men come home from WWII and start families- the baby boomer generation•Suburbs begin forming•Korean war starts and ends•Cold war tensions•Vietnam war starts•Eisenhower elected•Segregation in schools is declared unconstitutional •Rosa Parks is arrested •TV becomes popular
ECO 202GDP Expansion•1950: Korean war causes an increase in GDP•1950: TV, marketing, and credit cards cause a rise in consumerism •1955: Vietnam war causes an increase in GDP •2 relatively mild recessions in 1953/54 and 1957/58.FIGURE ONE: Gross Domestic Product, U.S. Bureau of Economic Analysis.
ECO 202GDP: Important Events •Korean War•Interstate Highway SystemFIGURE TWO: Unemployment Rate by Year Since 1929 Compared to Inflation and GDP. Amadeo, K.
ECO 202UnemploymentFIGURE THREE: Civilian Unemployment Rate, U.S. Bureau of Economic Analysis.•Number of unemployed people/ the labor force•Increase in unemployment during recessions•Lowest 2.7% in 1952•Highest 6.2% in 1958
ECO 202Inflation•War tends to cause inflation- both the Korean and Vietnam wars did cause inflation, but not nearly as much as WWII. •Inflation rate= (CPI2-CPI1)/ CPI1 x 100. •Inverse relationship with GDPFIGURE FOUR: Consumer Price Index, U.S. Bureau of Economic Analysis.
ECO 202Unemployment and Inflation- Important Events•Korean War•Increased inflation•Decreased unemployment•Highway Federal Aid Act of 1956•Increase inflation•Decreased unemployment •AD/AS model •The highway act would cause a rightward shift in the SRAS, due to increased resources/technology. This also increases real GDP.