Major Sources of Inflation Research Paper Example | Topics and Well Written Essays - 750 words

major Sources of Inflation - Research Paper ExampleHowever, it is the duration of ecological nicheal that determines whether the recession is harmful or not. Ideally, cyclic recession should end in few months and should initiate the process of recovery. Although, USA is one of the safest economies of the world, even indeed its history is pervaded with periods of recession at frequent intervals. In this essay, we are going to look at the recession of 1973-1975 and compare it with the crisis that hit the world in the second quarter of 2007. (Amadeo, 2010).The recessionary period which started in the form 1973 lasted almost 16 months before finally ending in March 1975. There were several causes that contributed to the enthusiasm of this recession. The major reason behind this troublesome period was that the USA had gone off of the gold well-worn and had started to print more currency. This was the fundamental reason that initiated the recession. In the first phase, this printin g of money resulted in inflation. This endure be explained by a simple phenomenon of two much money chasing too few goods. When the politics prints more money, more money is accumulated in the peoples hands and they start consumption more. However, if the increase in the output signal of goods and services is less than the speed at which the quantity of money is growing, it leads to recession as people then are prepared to pay high prices for goods which are less than the mass demand. Similarly at the same time, the government had started wage-control measures which increased the cost of production and many firms made the high-priced workers redundant and started producing at a capacity below the maximum capacity. This initiated a cycle where less production and high wages resulted in inflation and a never ending spiral was created. As a result of this recession hit the US economy. At the same time, USAs GDP started locomote and there were three consecutive period of negative growth. In 1974s third