THIRD Film Review

THIRD Film Review - with a hard hit agriculture economy and...

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Abraham Dweck 11/28/08 Prof. Holland BE/BF 304 3rd Film Review Stagflation is defined as an economic condition of both continuing inflation and stagnant business activity. In the 1970’s this was something that many economists could not understand. In today’s crisis there are both similarities and differences to the definition of stagflation. The Federal Reserve’s role in the crisis was almost blinding as at first they did not correctly identify the problem. We also saw a new crisis arise in the late 1990’s because of the fear of terrorism. As I said earlier stagflation is an economic condition of both continuing inflation and stagnant business activity. But, how can this be possible and why couldn’t the United States government see this coming and why couldn’t they fix it? The answer is that they were only looking at it from the demand side and now from the supply side. The US was used to raising or lowering the interest rates to affect the economy but now
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Unformatted text preview: with a hard hit agriculture economy and an oil embargo; it was the supply field that needed the help. This was new to the US. They had never had such a Food and Oil chock in their history especially one of this magnitude. President Ford was against inflation as he was still using the old formulas and imposed a tax surcharge, this caused GNP to drop! So in 1975 the US imposed a 23 billion dollar tax cut and the Fed increased the money growth supply. This again did not work as they were only looking 1 at demand and not supply. So the United States finally turned and found the problem of supply and the president passed a bill to increase the supply by making more jobs in infrastructure. This helped a lot as now there was more of a supply of jobs and the problem slowly melted away as more and more Americans now had money and there was a supply for them to spend that money....
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THIRD Film Review - with a hard hit agriculture economy and...

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