inflation as their major economic problem. Expensive wars have traditionally been

recognized as the sources of inflation. Governments, in effort to squeeze more production

out of an economy, have often resorted to printing or releasing more money to finance the

purchase of arms and soldiers1. In an economy already producing at full capacity, the

issuing of additional money serves to bid up the prices of the output of the economy,

resulting in inflation. It was generally assumed from past experience, that once the

economy returned to its normal state, the persistent tendency for overall prices to rise

would disappear, bringing inflation rates back to normal. World War II brought the

persistent inflation that economists came to expect. In the 50's and early 60's inflation

resumed to very low rates concomitant with large growth increases and low

unemployment. But, from 1967 to 1974 the rates of inflation reached alarming proportions

in many countries, such as Japan and Britain, for no apparent reason. This acceleration in

inflation has forced many economists to reevaluate their views, and often align themselves

buy. According to Classicalists, The existence of an excess supply of labor will lead to a

Quantity theorists believe that over an extended period of time the size of M, the

line. When Y intersects E at the 45 line, there is an equilibrium between expenditures and

decided to accept a wage cut, other groups would likely not follow. Therefore labor

cuts. Those most effective mentioned in the textbooks are collective bargaining and

an individuals money income can buy), L d for the demand for labor and L s for the supply

Some topics in this essay:
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