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1968 - year of inflation

  • Computer Science
  • Economics


1968—Year of Inflation 1968-Year of Inflation Ii)I RODUCTION MD INCOME rose rapidly dur- ing 1968, and employment remained at high levels. The major economic problem of the year was infla- tion, generated by an excessive demand for goods and services. By the latter part of 1968 average prices were 4 per cent higher than a year earlier and 12 per cent above those in late 1964, ground. of tn/tati•on~ The current inflationary upswing began about four years ago, after an extended period of near price stability. From 1957 to 1964 overall prices rose at an average 1.6 per cent annual rate. This was in sharp contrast to the rapid 6 per cent rate of infla- tion during World War II and the 3.5 per cent average rise of prices from 1946 to 1957. Prices probably increased even less during the 1957 to 1964 period than indicated by the trend rates of the indices. Quality improvements and price dis- counts may not have been given proper weight in computing average measures, and any shifts of demand to new, less expensive, substitute products would cause the price rise to be overstated by a general index. The relative stability of prices from 1957 to 1964 reflected the fact that total demand for goods and General Price Index Rat a Scale ga,.a Scale 1958’l00 1958 :30 515 1 510 ito 1960 596! 5962 1963 1964 1965 1966 5967 1968 ‘Ac, a,, hfl.lhSc,e.A’ 0, 5,,., e L~ P. ,a~• ,,,,.l,o~e,el l,.,.~.b.s,, ,cp,,.,d si, hey,, p, e~le ,emp, ,es000t ,,td.,elyp.,~ffls.tkp. I tend, ,e,sd.l,pl,lI.d 3 q.,esr 120 ~0s 10 -~ C,t5~, -I —~ — ~— -~ —( ;— y o~V ~3 45,’, ]etfl4I hqc2,d,e. Ii 4 I~ I ~.: 3d,’ 25 y,n services grew only slightly faster than the productive capabilities of the economy. From 1957 to 1964 total demand rose at an average 5.3 per cent annual rate while real output was increasing at a 3.6 per cent rate. Total demand did not rise evenly during this period. Although pauses in demand growth in 1958 and 1960 were helpful in extinguishing inflation

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